News
November 21, 2019

Pending home sales continue increasing, growth rate slows

There were 769 Tri-Cities area new contracts (pending home sales) approved last month – nine more than September - and 98 more than October last year, according to Realtor Property Resource (RPR).  It was the second straight month for the short-term seasonal slowing trend while the long-term trend continues a slow upward trajectory. The growth of the long-term trend peaked in February and has ebbed since then. 

NETAR President Karen Randolph said historically low mortgage rates are a big factor in the resilience of the market as home prices continue increasing faster than wages, and the inventory remains as tight as it has been in decades.

Pending sales are a leading indicator of housing activity based on signed contracts for existing single-family homes, condominium, and townhome resales in the 11-county area monitored by the Northeast Tennessee Association of Realtors (NETAR) Trends Report. Since resales go under contract a month or two before the sale is closed, pending sales typically lead existing home sales by about two months.   Currently, it is not unusual to see up to 5 percent or more of the contracts fall through due to contract contingencies.

October’s closings accounted for almost 40 percent of the contracts awaiting closing. That percentage is the lowest preliminary closing rate so far this year. Expect it to increase with the adjustment in November’s report.  The closing rate has labored under the weight of contract contingencies this year. About 70 percent of new contracts face a contingency that has to be met before moving to closing.  The most common contingencies are home inspections (60 percent), obtaining financing (48 percent), and an acceptable appraisal (47 percent).

So far this year, new listings are 6.5 percent better than the first 10 months of last year while new pending sales are up 20 percent.  The region had 3.5 months of inventory in October. “That was a very small improvement from September and didn’t alter the fact that market’s sales pace continues to absorb inventory faster than it is being replaced,” said NETAR data analyst Don Fenley.

 

NETAR - the voice for real estate in Northeast Tennessee - is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,300 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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