The Moody's/REAL national Index from Real Estate Analytics, LLC (REAL) shows that transaction volume has fallen to a new low level. The index of all property types measures 125.04 for May 2009, a decline of 7.6% from the previous month.

The index, which captures price data through the end of May, is 28.5% lower than a year ago and 34.8% below the peak measured in October 2007. Its analysis also indicates a 32.6% drop in prices over the past two years.

Distressed sales are beginning to exert downward pressure on returns, according to REAL analysts. And rising mortgage interest rates have likely derailed or postponed some deal closings.

The apartment sector felt the brunt of the effect, leading to a collapse in volume greater than any other property type for the month of May, analysts noted.

“We cannot underestimate the enormity of what the data has represented in the past two months,” said Neal Elkin, President of REAL. May marked a new low for both dollar and volume deals.

The price decline was less than last month’s price drop, and that might be seen as a positive sign in some circles, Elkin added. It could suggest prices may be starting to bottom out, but until the dollar transaction level and deal volume rise, it’s difficult to draw a definitive conclusion, he said.

Of the 282 transactions recorded by REAL in May, 52 were repeat-sales transactions incorporated into the index calculation.