Pricing falls 7.6% in May, Moody’s says

NEW YORK - The Moody’s/REAL National All Property Type Aggregate Index from Real Estate Analytics LLC, (REAL), measured 125.04 for May 2009, a decrease of 7.6% from the previous month representing the second largest one-month decline after April’s 8.6% decline.

The Index, which has captured price data through the end of May 2009, is now 28.5% lower than it was a year ago and 34.8% below the peak measured in October 2007. The index also indicated a 32.6% drop in prices over the past two years.

“We cannot underestimate the enormity of what the data has represented in the past two months,” said Neal Elkin, President of REAL. “The fact that this month’s price decline is less than last month’s price decline might be seen as a positive sign in some circles. It could suggest that bottom in prices maybe starting to form, however, we need see higher transaction dollar and deal volume in order to draw a more would definitive conclusions.”

Transaction volume in the overall market has fallen to its lowest level yet. There were 282 transactions captured by REAL in May and, of those, 52 were qualified as repeat-sales transactions to be incorporated into the calculation of the index. May marked a new low for both dollar and volume deals.

The data indicated that distressed sales are almost certainly starting to exert downward pressure on the returns. In addition, rising mortgage interest rates have most likely derailed or postponed some deal closings. According to REAL, the apartment sector felt the brunt of this effect, leading to a collapse in volume greater than any other property type for the month of May.