Lack of inventory drives home prices higher
As predicted, home sales have gone flat, and the continued lack of inventory is driving prices higher.
The early version of NETAR’s Home Sales Report shows February’s pending sales reversed a five-month decline and new listings made a small increase. However, pending sales continue to outnumber new listings so active inventory is getting no relief.
For the first time, the region had less than a month’s inventory on the last day of February. Five to six months inventory is the benchmark for balanced real estate market conditions. The last time the region had balanced market conditions was in the first quarter of 2018.
Builders are adding new homes to the inventory as fast as they can. But supply chain issues material and labor costs are slowing that progress. That inventory may hold the key to motivating existing homeowners who would like to sell but have resisted entering a market with fewer product choices and increasing prices.
If the current push by builders and multifamily investors is being cautiously watched. If it withstands the economic and labor headwinds and if migration levels are sustainable, it’s estimated the local market could be back to moderately balanced conditions by 2024.
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 1,600+ 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