June 23, 2019

If closings were down in May, why are Realtors® so busy?


2019 NETAR President

Closings on home sales were down for the third time this year in May.  That decline is one more year-over-year compared to 2018 in the 11-county market monitored by the Northeast Tennessee Association of Realtors® (NETAR).  So, if sales are slowing down, why are my Realtor® colleagues at NETAR saying they are as busy as they’ve ever been?

The answer to that question is laid out in NETAR’s monthly Trends Report in the year-over-year market snapshot.

May’s all-residential closings were down 2.7 percent from May last year. When you look at the year-to-date closings, they were 3 percent greater than the first five-months of last year.  What is keeping my Realtor® colleagues so busy is the market trend, and trend outlooks offer a better picture of the market than snapshots.

I know you hear “the market is going up, and the market is slowing down” talk in the media, but here is what the local trend is telling us. Residential resales and prices are increasing, but the growth rate is beginning to slow from the hectic pace it has been on for the last three-and-a-half years.

The May 2015 Trends Report marked the beginning of this local housing market boom. That marker was the month when closings consistently outnumbered the closings for the same month of the previous year. During the next 41 months, monthly closings were down only 10 times. In each of those 10 declines, it was a small number of closings that evaporated in the year-to-date market momentum.

Here is another way to look at it. There was a 33.3% increase in closings last month compared to May 2015.  Another way to evaluate the market’s health is annual closings.  In 2105 closings were up 9.5 percent. In 2016 they were up 15.3 percent. In 2017 the market paused to catch its breath with a 2.3 percent increase. Last year they were up 5.7 percent.

Any way you look at it, we have strong growth for a market that has and continues to have a conservative history. There has been only one year in the past decade when the annual closings growth was in double digits. Slow, steady growth is the mark of a housing market that fluctuates with the larger economy but does not participate in the big ups or down. It is like a boring, conservative, corporate bond that measures worth in the long-term gains.

Next month, the year-to-date price and sales trend will reach a mid-year point that affords a better picture of what the rest of the year will look like. At the five-month trends pace, the annualized closings number is down 3 percent from last year. This outlook is soft because there are a couple of months closings from the peak buying and selling season that have not been factored into the number crunching. If they follow this year’s pattern, it will shrink that annualized 3 percent number. Even if they don’t, a 3 percent decline from last year’s annual closings would be the second-best year for closings since 2008. Now you know why May’s housing market did not give my Realtor® colleagues pause to catch their breaths.

NETAR is the voice for real estate in Northeast Tennessee. It’s the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,200 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports, and the regional market analytics can be found on the NETAR websites at .