Despite signs of improvement in the U.S. housing market, the state housing finance agency sector still faces credit risks caused by high unemployment levels, low mortgage rates, low home prices, and uncertainty in government policy, according to Moody’s Investors Service.

For these reasons, the ratings agency said Thursday it is keeping its negative outlook on the sector for the next 12 to 18 months, saying it expects that these headwinds will continue to drive near-term challenges for HFAs.

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