September 2, 2018

NE Tenn. housing market marching to its own tune as other markets slow down


July's housing market report offered some surprises that warrant a closer look.

Aaron Taylor
2018 NETAR President

Mainstream media was full of reports from the National Association of Realtors® (NAR) that existing home sales declined for the fourth straight month to their slowest pace in two years.  Unadjusted sales were 1.5 percent below last year, and the median price was $269,600, up 4.5 percent.

At the same time, Tennessee Realtors® was reporting single-family resales were down 0.1 percent, and the median price was $234,900, up 6.7 percent.

The surprise – and a big contrast – was the Northeast Tennessee Association of Realtors® (NETAR) Trends Report showed local single-family resales had their 7th straight record month. Sales were up 5.4 percent from last year, and the average sales price of $172,465 was down 0.1 percent. And July's pending sales report pointed to more of the same. It showed new approved contracts for single-family, condo, and townhome sales were at a 2018 high.  NETAR's forward looking pending sales indicator was up 2.4 points from June and at the second highest level in three-years.

And then there was the inventory report. Like the national and state reports, the local inventory is at record lows.  One reason is there are not enough new homes being built – especially those in the affordability range. But that's another story. The inventory surprise was new listings for the first seven months of the year are up. It's not a big increase - 0.1 percent. But new listings are beginning to outnumber new pending sales. That's welcome news and combined with the strong local demand, and approved contracts set the stage for some more third-quarter record sales reports.

This isn't a comparison to state or U.S. numbers, but another key metric local market watchers pay attention to is the average sales price as a percentage of the average listing price and the overall average price. That shows you the average discount sellers are making and the seven-month appreciation trend.

So far this year the average price is 7.7 percent better than it was during the first seven months of last year. And the average sales price as a percentage of the average listing price has been 96 percent for nine of the past 13 months. June was a high point of 97 percent while there were a couple of months at 95 percent – but none lower.  

On paper, the numbers show we're in a hot market marching to our own tune while the state and national markets are slowing down. That may bring a smile to some sellers' face, but most sellers are also buyers. The truth of the matter is more homes would be selling if there was more inventory. What many sellers really want is committed buyers moving the deal to the closing table without delays or the hassles. The best way to ensure that is partnering with the right professional Realtor®. Savvy sellers find a partner who can explain what's going on and why and then tailor the finances and needs of their client to the best opportunity in today's market.

Aaron Taylor is the 2018 president of the Northeast Tennessee Association of Realtors®. The real estate education and trade group is the voice for real estate in the Tri-Cities and has over 1,200 local Realtor® members and over 100 affiliates.