The Tri-Cities new home industry posted modest growth during the third quarter marked by a slowdown major markets slowdown balanced by growth in smaller county markets.
Permit pulls for new residential residences was 2.7% better than Q3 last year. Year to date, new permits are a 4.8% improvement over the first three quarters of last year, according to The Market Edge’s Residential Building Permit Trend Report.
Year-to-date permit totals show growth in Hawkins, Sullivan and Washington counties slowing when compared to the same period last year. At the same time, new home construction gains in the smaller counties and Washington County VA was enough to pick up the slack.
Despite a 9.5% drop in permits, Washington Co. TN led the Tri-Cities in the number of new home permits.
Sullivan Co.’s year-to-date total was 7.6% off last year’s pace.
Although the number of permits is smaller, Carter Co. is the year-to-date growth county. So far, this year it has permitted 66 new homes compared to 30 during the first nine months of last year.
Here’s a snapshot of region’s year-to-date permits compared to the same period last year:
Carter – 66, up 120%
Greene – 81, up 17.4%
Hawkins – 14, down 6.7%
Sullivan – 170, down 7.6%
Washington Co. TN – 228, down 9.5%
Scott Co. VA – 21, up 40%
Washington Co. VA 72, up 25.3%.
Unlike other housing market components, new homes have not recovered to pre-recession numbers. The Q3 performance was down 49% from the first three quarters of 2008. But that doesn’t weigh heavily with some builders. They’re more focused on today’s market realities. And from that perspective, the market seems to be comfortably pacing new home demand.
At mid-year Metrostudy analytics for Builder Magazine show the sales price and mortgage for new homes increased in both Tri-Cities Metropolitan Statistical Areas.
June’s average sales price in the three-county Johnson City MSA was $267,572, up from $248,100 a year ago. The average mortgage for those new homes was $225,681 compared to $197,866 a year ago.
New home buyers in the four-county Kingsport-Bristol MSA paid an average price of $215,877 in June and increase from $159,845 a year earlier. The average mortgage size was $193,959, up from $156,439 June last year.
Drive-by observations show quite a bit of new home construction across the region.
For example, Michael Garland launched a new phase to Garland Farms Estates earlier this year, and it’s making noticeable progress as are some the other hot spots in Washington County and Gray.
Erick Kistner, Principle Broker at Bridgepoint Realty and Auction and president-elect at the Northeast Tennessee Association of Realtors, is all smiles when asked about the Edinburgh Community. He cited 45 closed sales since January 2015, 26 homes under construction and grading for Edinburgh South is almost complete with 12 lots pre-sold to builders. He also said there’s five new home under construction at Polo Fields with seven new lots coming on line soon.
But while the new homes sector – like single-family resales and job creation – continues growing the rate of growth is slowing. The new home sector also still faces headwinds like tight financing, a labor shortage, and increasing building material costs. Another reason there’s less construction is there are fewer builders than there were before the recession.
The new home industry’s recovery is also coping with the region’s demographic and population issues. Washington and Carter counties are attracting most of the in-migration population, and the region’s population is rapidly aging. But most of the new home business isn’t oriented to the aging population any more than it is to new comers.