News
May 26, 2019

NAR forecast, NETAR pending sales report point to housing market gains

By KAREN RANDOLPH

The local housing market is in its sixth year since existing sales recovered from the Great Recession. Today’s market and local economy have a different feel.


KAREN RANDOLPH
2019 NETAR President

Several things are boosting my excitement level. One is the annual mid-year real estate forecast from the National Association of Realtors® (NAR) Chief Economist Lawrence Yun. Another is our local Pending Home Sales Report for the 11-county region monitored by the Northeast Tennessee Association of Realtors®(NETAR).

Mr. Yun’s forecast is an annual highlight of NAR’s Trade Expo in Washington, D.C. I was fortunate to be in the audience when he outlined a positive outlook for the residential and commercial real estate sectors. Realtors® have a lot of faith in his analysis – not only because he’s one of our own - but because he has been cited as one of the top 10 economic forecasters in the nation by prominent media outlets. Plus. he has the track record to keep that standing. 

Mr. Yun stated new home sales would be a major market driver. Our new home industry has been growing but performing at approximately half of its pre-recession capacity. That’s beginning to change. Banks have made more capital available, and demand is increasing. Resale absorption rates began sending builders signals last year that there was pent up new home demand not being met. This year several builders have turned part of their focus on patio homes and smaller single-level home and are enjoying the result. A large national builder is also reportedly entering the local market for the first time. So far, they’ve been silent about their plans, but grading is under way.

The big thing more new homes will do is free up more existing home inventory, which has been at record lows since early last year.

NETAR’s April Pending Home Sales Report shows new approved contracts plateaued last month. They were only five more contracts compared to the March total. Still, it was enough for a new record. New contracts have increased for 20 straight months. So, April’s softer new contract number is like the four-month growth rate for residential sale. It was the weakest in four years, but strong enough to be a new sales record.

While the housing market is outperforming the rest of the economy with a 5.1 percent four-month sales growth rate, other key components of the local economy are also positive.

First quarter nonfarm jobs were up by 0.8%.

Employment is up 1.6%.

Unemployment is at record low levels, and wages are increasing. According to Attom Data Solutions, those increases ranged from a high of 6% in Sullivan to 4% in the surrounding NE Tenn. counties.

Mr. Yun projected that home prices would be up 2.3 percent this year and 3.3 percent next year.  Despite the “a recession is coming” drone from some pundits and media outlooks, Yun does not see it in the cards just yet.

So far this year single-family average prices are up 2.5 percent while townhome-condo average is 5.3 percent. A better picture of how local prices will look at the end of the year will emerge with data from the May and June sales.

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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 https://netar.us/voice-real-estate-northeast-tennessee .

 

 

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