Tracking today’s housing economy is a daunting task. And putting context into the flood of data in the media and on the Web can be as much an art as a science. But now – more than ever before – locking in reliable sources and working with professional Relators® is critical for buyers, sellers, investors, and businesspeople trying to keep their fingers on the pulse of their community.  

The Northeast Tennessee Association of Realtors® (NETAR) is the primary source for local housing market information. Although some of it is under the public media radar, it’s important because the market has become more complex as it transitions from unsustainable highs to something that will eventually look more like a typical market with balanced conditions. 

Here’s a rundown of some of November’s primary data gleaned from NETAR’s weekly and monthly market reports that are available at www.netar.us and the associations’ social media sites.  

HOME SALES 

So far this year sales are funning 8.6% behind last year. They peaked in May at the record high of 840 closings. The long-range trend has arched downward since July. Currently, year-to-date sales are running slightly ahead of where there during the first 11 months of 2018. They’re up 0.1% (10 sales).  

PRICES 

Tri-Cities home prices have made some major gains since the pre-pandemic benchmark of 2018. The median sales price is up 72.3% from that benchmark.  

That has injected a huge amount of equity wealth for local homeowners. According to an analysis by ATTOM Data Solutions, more than half of the local mortgaged properties have an equity-rich status. An equity-rich property is one where the combined estimated amount of loans on it are 50% or less of its estimated market value. It’s also noteworthy that almost half of all homes in the region are mortgage free.  

The local economy’s and consumers’ health will determine where home prices close this year and go next year. Affordability and accessibility will likely present the strongest headwinds.  

INVENTORY  

The number of homes on the market has a lot to do with what prices do. Fewer listings typically mean higher prices. More properties on the market give buyers more leverage. So far, the overall inventory remains is still squeaky tight. But it is slowly increasing. Some community and submarkets have enough inventory for a toehold on balanced conditions in specific price ranges.  

At mid-November, the region had 3.3 months of inventory. That’s how long it would take to sell everything on the market at the current sales pace. About 1,200 more listings were needed for broad, balanced market conditions. The last time the region had balanced conditions was in 2018.  

DEMAND 

Demand for homes is softening as we near the end of the year. There is still strong organic pent-up demand and from the influx of new residents moving to the area. The time a property is on the market before selling has increased, by only by a few days. Another softening market demand signal is sellers have reduced their asking prices to close about half of the monthly sales so far this year.  

PENDING SALES 

NETAR’s current pending sales report is down 10.7% from October and down 0.8% from last year. Pending sales represent homes that have a signed purchase contract but have not closed. Accepted contracts typically close in a month to six weeks. That aligns with the closings trend and what you would expect in a transitioning market as it nears the last months of the year.  

BOTTOM LINE 

Home sales activity continues cooling down, and there is some slight downward pressure on prices. The price growth rate is slowing, but prices are not crashing. Homes are spending more time on the market and buyers are slowly gains more negotiating power. Inventory is slowly increasing. The outlook from NAR’s Chief Economist, Lawrence Yun, is for a double digit increase in sales next year and muted price increases.