Home Sales Down, Prices Slightly Higher; All Eyes On Inventory

Michelle Davis - 2024 NETAR President

Now that we’re past the first quarter, a clearer picture of the housing market is developing. More buyers are getting price cuts. But it’s still a sellers’ market. 

March’s existing single-family and condo sales were down 11.6% from last year. That’s no big surprise. Last year’s first quarter didn’t hit the pace of retreating to a pre-pandemic level. Quarterly numbers offer a better perspective. They were up 0.6%. In other words, sales for the first three months of the year were essentially flat with last year.  PRICES UP 6.7% 
The median sales price bumped up to $256,000 last month, up 6.7% from last year and up 2.4% from the previous month. While there’s year-over-year growth, the quarterly numbers again paint a better picture. The quarterly price ($249,900) is up 6.1% from last year. 

Inventory continues to slowly improve, but you must dig deeper than just the active and new listings year-over-year comparisons. At month’s end, the region had 2.3 months of inventory. It’s almost double from this time last year, but woefully short of balanced conditions. Last month’s market excitement, and sales, was driven by an increase of listings in the affordable price zone. Buyers jumped on it and pending sales absorbed all the new listing and then some. Currently, the market needs about 1,800 listings to be at a pre-pandemic level with balanced market conditions. 
Both mobile and new home listings showed a slight increase in March. New home listings have been in the 400 plus range every month this year, so far. 
New listing in the affordable price zone of $100,000 to $249,999 didn’t continue increasing last month. They were 23.5% below last year.  
New listings in the move-up price range of $250K to $499,999 were up 7.7% and the $500K and up luxury market was up 9.3%. At month’s end, the price range with the most new listings was the $500K and up (135 listings). 

As measured by the time a property is on the market before selling, demand is slowing. Last month the median days on market was 61 – 11 more than last year. Days on market is the time a property is listed until it closes. The average time that a home goes under contract is a different matter. It’s closer to three weeks and depends on a wide variety of factors.  
Agents report they are still seeing multiple officers, just not as many as the previous year. Properties that are priced right and those that have been overpriced then reduced tend to attract the most attention. 
A little over a third of the properties that sold last month were reduced from the original listing price. The average reduction was $27,542. The typical reduction was $10,000. The median list price was $306,010. 
More than half of the properties sold last month saw price concession during negotiations. The average was $18,511. The typical was $10,000. They accounted for 59% of the total sales. That’s the highest share of total sales in a year. 

Since home sales are price dependent, interest and mortgage rate speculations continue to consume some of the housing demand discussions. Mortgage rates have seen some retreat, but outlooks are growing dimmer for significant downward movement. In fact, some key economists think the FED will not reduce the prime interest rate this year if the robust labor market continues, and the inflation rate continues its slow ebb. 
Some locals are reportedly growing accustomed to mortgage rates where they are and since they’re sitting on record high housing wealth may be leading to getting into the market – especially since new home inventory is on an upswing and builders are increasingly competing with existing home conditions. 

Although buyers have gained some advantages, it’s still a sellers’ market. A little over 40% of the properties sold last month were for or above the list price.

NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,800+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us