There were about 1000 approved contracts for residential resales awaiting approval at the end of February, according to the Northeast Tennessee Association of Realtors’ (NETAR) latest report. Those contracts were in the pipeline before Coronavirus took over the 24-7 news cycle.
Pending sales are a leading indicator of housing activity based on signed contracts for existing single-family homes, condominium, and townhome resales in the area monitored by NETAR’s Trends Report. Since resales go under contract 30 to 60 days before the sale is closed, pending sales typically lead existing-home sales by about two months. The local fall-through/cancellation rate has been as high as 10 percent due to contracts with contingencies. That will likely increase as buyers become more concerned about Coronavirus and the economy. NETAR’s March home sales report will be released shortly after April 10.
The unprecedented measures underway to combat the spread of COVID-19 and the resulting concerns about the decline in the direction of the economy will affect the local housing market. “How much remains to be seen,” said NETAR President Kristi Bailey. The local housing market has been resilient during past downturns, she added.
Current conditions will likely follow what’s happening on the national level, said Don Fenley, NETAR’s data analyst.
Active listings at the end of February were down 33 percent from a year ago, and the region had 3.4 months of inventory. A similar situation exists on the national level. “With fewer listings, home prices are likely to hold steady,” according to the National Association of Realtors (NAR) Chief Economist Lawrence Yun. “The temporary softening of the real estate market will likely be followed by a strong rebound once the economic quarantine is lifted, and it’s critical that the supply is sufficient to meet pent-up demand,” he said.