Moderate levels of new single-family home sales and the erratic behavior of the multifamily construction market have contributed to a first-quarter decline in the Ticor Index, a leading indicator of national real estate activity.
The first-quarter decline continued into the second quarter with a drop of 2.2 points from March to April. Total housing starts were up modestly in April from March, pulled along by a spurt in apartment construction, according to Winston V. Morrow, president and chief executive of Los Angeles-based Ticor.
In March, the index stood at 94.8% of its 1981 base-year activity, a drop of 3.1 points from February and a dip of 5.2 points from the March, 1984 mark, Morrow added.
"The multifamily market has been running hot and cold since the end of 1984's third quarter," he added. "The uncertainty of the tax treatment of real estate investment--given the various tax revision proposals being discussed--has caused this fluctuation."
Morrow believes that no major tax legislation will be enacted during the remainder of 1985, lifting the weight of uncertainty from the market.
He added that the short-term outlook for housing remains positive: mortgage rates have dropped seven consecutive months through February, and rising personal income, coupled with stable home prices, has helped increase the affordability of housing.
The forecast is a result of the ongoing analysis of real estate and housing trends published each quarter by the Ticor Research Council. The council evaluates data from external sources and current information from Ticor Title Insurance, Ticor Mortgage Insurance, Ticor Realty Tax Services and Ticor Home Warranty.