The U.S housing sector is poised for continued growth in 2020, but the emerging risk of the coronavirus outbreak and its impact on the economy could be disruptive, according to a report by Nationwide.

Data from the firm's Health of Housing Markets (HoHM) Report shows that housing trends have improved in many local markets, with more than half of metro areas showing a positive ranking this quarter.

The U.S. housing market's health status, as measured by the Leading Index of Healthy Housing Markets (LIHHM), stood at 106.1 on a scale of 125. The report noted that this marked the sixth consecutive quarterly gain for this metric. The positive outlook, the report said, is driven by demand factors such as low mortgage rates, above-trend household formations, the lowest unemployment rates in 50 years and rising incomes.

The report further pointed out that delinquency rate has declined in each of the last six quarters and has fallen to a level below 2% and house price gains have accelerated again in response to excess homebuyer demand with existing home sale supply levels very tight. Still, the report noted that price growth remains near the long-term average and, with low mortgage rates, housing affordability has remained positive.

Another positive indication is that well over half of the regional LIHHM performance rankings in those local markets indicate a high degree of sustainability, the report said. It also noted that housing demand in most metro areas across the country is being driven by an increase in housing formation regionally and the low unemployment rate. Additionally, rising incomes have kept pace with house price gains, helping to keep homes relatively affordable in many areas, the report said.

The report found that nearly 60% of the 400 metropolitan statistical areas (MSAs) evaluated had a positive housing market ranking in the first quarter. Across the country, only 29 MSAs fell into the negative category. And there were 138 MSAs in the neutral category, which suggested a mixed outlook for housing sustainability over the next year or so, the report noted.

Despite the positive outlook for the housing sector, the report noted that government-insured and jumbo loans could present a risk in the next downturn.

It pointed out that while mortgage delinquencies and foreclosures are not immediate concerns, some homeowners could be at greater risk during the next economic downturn. Easier access to government loans such as FHA, VA and jumbo loans since 2012 suggest that they would be more vulnerable than conventional loans, conforming loans to worsening economic conditions, the report said.

As for the metro areas with the best LIHHM forecasts, the top 10 are Hinesville, Ga.; Detroit-Dearborn-Livonia, Mich.; Cleveland-Elyria, Ohio; Trenton, N.J.; Sebastian-Vero Beach, Fla.; Lake County-Kenosha County, Ill.; Warren-Troy-Farmington Hills, Mich.; Philadelphia; Newark, N.J.; and Camden, N.J.

In contrast, the 10 metro markets with the least positive LIHHM outlooks are: Yakima, Wash., Kennewick-Richland and Walla Walla, Wash.; Cheyenne, Wy.; Odessa, Texas; St. Joseph, Mo.; Hickory-Lenoir-Morgantown, N.C.; Albany, Ore.; Manhattan, Kan.; and Pocatello, Idaho.