Editorial|&utm_term=|Website-Editorial-NAT(Website)|">Auction.com's first CRE Nowcast, a pricing index that combines the firm's proprietary transaction database, Google Trends data and investor surveys to forecast CRE pricing trends in real time, shows that October commercial valuations saw the smallest increase in nearly five years. The index also showed that prices declined in two of the five property segments studied.

However, the news is not all gloom and doom. Three property segments saw valuations in the month, with office growing by 50 basis points, industrial by 200 basis points and hotels by 120 basis points, according to the new pricing index. Retail valuations were off slightly, down 20 basis points, while apartments was the weakest of all sectors, down 250 basis points.

According to Auction.com's EVP Rick Sharga, "While it's certainly too early to speculate about whether CRE market prices have peaked, the relatively weak showing in this month's index certainly bears watching. Year-over-year price growth is still healthy across the board, and sales volume remains strong, so we could be looking at a one-month anomaly rather than the beginning of a downward trend."

Peter Muoio, Auction.com's chief economist, also cautioned against reading too much into a single month of data. "This could just be the market taking a bit of a breather from its strong run-up. That wouldn't be much of a surprise following August's stock decline and with the continued uncertainty regarding whether the Fed will raise interest rates any time soon."

GlobeSt.com was unable to reach Auction.com before deadline to discuss whether the market should take a "wait and see" attitude toward its health or if there are other indicators we should be studying to determine if the market is truly softening. However, if the company's own progress is any indication, the industry is showing few signs of ill health. As we reported at the end of October, the firm reported closings on 76 commercial assets during the month of August with a total combined sales price of $382 million, making it Auction.com's highest one-month total of 2015 and well above the company's August 2014 mark of $242 million.

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Still, experts are beginning to say the industry should be exercising more caution. As we recently reported, economist Sam Chandan, Ph.D., during Trigild's recent 15^th Annual Lender Conference in San Diego, said that the good and bad news is that buoyed by a flood of capital, this year will be "the biggest for CRE ever." His keynote, titled, "The Best of Times Beget the Worst of Times," set the tone for the entire three-day conference—providing an important reminder for conference goers: "The discipline to say no to a deal and look beyond sentiment is critical."

Auction.com plans to issue its CRE Nowcast at the beginning of each month after combining transactional data, related online search activity indicating purchase intent and investor survey results. The company runs multiple versions of the Nowcast model and layers in additional variables every day to improve its accuracy in predicting pricing trends across CRE sectors in key US markets. Future iterations will include regional, local and individual asset-based price indicators. By analyzing current market conditions as opposed to only historical data, the firm aims to provide more relevant and timely insight to real estate investors, economists and government entities alike.

The Auction.com CRE Nowcast is based on data modeling developed by Google chief economist Hal Varian, who defines "nowcasting" as "contemporaneous forecasting"—the ability to predict what is happening as it occurs. Following Google Capital's investment in Auction.com last year, the company consulted with Varian and applied his theories by combining publicly available and anonymous Google Trends data with its own proprietary transactional data to create a model for accurately predicting current commercial real estate activity. This data is supplemented with "real human" input through Auction.com's partnership with Situs and its Real Estate Research Report.