Magazine article American Banker

Real Estate Recovery Slows Down as Market for Housing Weakens

Magazine article American Banker

Real Estate Recovery Slows Down as Market for Housing Weakens

Article excerpt

WASHINGTON -- Weakening housing markets over the past three months contributed to an overall slowdown in the real estate market's comeback, the Federal Deposit Insurance Corp. said Tuesday.

The FDIC's latest survey of examiners and liquidators found that the proportion of respondents who reported improving conditions in local housing markets was the lowest in two years. However, the glut of commercial real estate property on the market continued to shrink.

The FDIC examines real estate conditions every three months by polling about 450 market experts from federal bank and thrift regulatory agencies. A composite score is then compiled that reflects both housing and commercial markets throughout the country.

In a continuing decline from the record of 78 in April, the national composite score dropped from 72 in July to 67.

"We can trace the less-positive October results directly to weaker housing markets," said Ricki R. Tigert, FDIC chairman. "Our most recent opinion survey picked up new indications that higher mortgage interest rates are adversely affecting potential homebuyers and, ultimately, home sales and construction."

The residential index dropped seven points to 64 over the past three months, while commercial real estate held relatively stable, dropping only one point to 71.

An index value over 50 indicates that more bank examiners and asset managers saw an upswing in conditions rather than a downturn. The higher the figure is above 50, the more examiners agree about the state of the market.

Commercial real estate continued to climb out of the slump caused by the credit crunch in the late 1980s. …

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