September 23, 2019

Pending home sales increase, August closing rate slows

There were 919 new approved home sales contracts in August - 13 more than July - pushing the Northeast Tennessee Association of Realtors’ (NETAR) New Pending Home Sales index to the highest level since March 2017.

The active pending sales total rose to 1,437 – 147 more than July, according to Realtor Property Resource (RPR). New contracts are those approved in the reporting month while the active pending sales total includes all that have not closed.

Pending sales are a leading indicator of housing activity based on signed contracts for existing single-family homes, condominium, and townhome resales. Since resales go under contract a month or two before the deal is closed, the index typically leads existing home sales by about two months.   Under normal market conditions, it is not unusual to see up to 5 percent of contracts fall through. In today’s market, that fall-through rate is often higher due to contract contingencies.

Only 48 percent of the approved contracts in August moved to closing.  That’s the lowest non-adjusted monthly closing rate so far this year and leaves over 700 contracts – many with contingencies – awaiting closing.  A National Association of Realtors (NAR) and NETAR survey focused on April to June conditions found 70 percent of contracts faced a contingency in making it to closing. The most common contract contingencies were as follows: home inspections (60 percent), obtaining financing (48 percent) and an acceptable appraisal (47 percent). The local situation has not improved since the study.

So far this year, new listings are 6.2 percent better than the first eight months of last year while new pending sales are up 17.9 percent. The region had 3.4 months of inventory in August. That’s the number of months it would take to exhaust active listings at August sales rate, said NETAR data analyst Don Fenley. It’s also the tightest inventory the region has seen since NETAR began reporting its monthly housing market report in 2008.

The median number of days of local listing was on market before closing in August was 73.

NETAR - the voice for real estate in Northeast Tennessee - is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,250 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 .