Pending home sales indices for the Tri-Cities region and the nation are back to close proximity.
The National Association of Realtors (NAR) Index was 108.3% in June up 1.6% from June last year. It brought the index back above to 100 level for the sixth consecutive month. The 100 level is based on a 2001 benchmark and is consistent with a healthy market and existing-home sales above the 5 million mark.
The Northeast Tennessee Association of Realtors (NETAR) Index was 110.3 up 3.2% from June last year. NETAR’s index is based on 2017 benchmark of 6,900 resales in the 11-county region monitored by the association.
NETAR’s index is based on a smaller data universe and tends to be more volatile so the most current reporting months are listed as preliminary and typically adjust lower due to the volatility of the number of signed contracts that do not move to closings.
Although the indices differ in the sample of signed contracts, both are forward-looking indicators. The local index points to a slightly stronger existing home sales economy which can be partially attributed to a proportionally stronger local involvement by investors, both those who flip home and small investors add to their inventory of rental homes.
A comparison of the indices for June illustrates how the local existing-home market did not experience the softening of sales that dominated headlines during the last quarter of 2018 and the first quarter of this year. According to NETAR’s Trends Report, local single-family sales outperformed the monthly sales of the previous years for 13 of the past 18 months and set an all-time monthly high of 691 closings in May 2017. A softening townhome and condominium resale market has pulled the total residential sales pace slightly lower than the single-family pace.
At mid-year total residential closings were 2.2% higher than they were during the first six months of last year while single-family closings were up 2.8%. The residential year-to-date average sales price of $175,750 is a 2.8% increase from last year, and the single-family resale average price is 3.7% higher.
NETAR’s market analytics page also benchmarks the monthly market share of single-family resales in the seven cities and 11 counties the association tracks. The monthly market share is benchmarked against each of each city and county’s individual annual market share of resales in 2018.
That metric shows that so far this year the dominant city markets (Johnson City and Kingsport) are underperforming last year as are the city markets in Bristol, TN, Bristol VA, and Greeneville. At the same time, the Elizabethton and Erwin markets are claiming a larger share of the existing home resales market than they did in 2018.
The county-level market share metric shows county resales outside the Kingsport and Bristol TN markets have sustained and exceeded Sullivan County market share when compared to last year. County market outperforming last year’s market share benchmark includes Greene, Carter, Johnson, Scott, and Lee.
Both the national and local housing markets have benefitted from a strong economy and an interest rate trend that has dropped 30-year fixed mortgage rate below 4%. Many consumers have seen that as “game on” sign for sales in the last half of the year. Those record-low rates have not had the same affect as they did in the previous year due to equally low inventories of both new and existing home on the market.
Lawrence Yun, NAR’s chief economists, said June’s contract signings indicate buyers are both enthusiastic about the market and of the potential of wealth gain, but he added that home builders need to increase inventory. “Homes are selling at a breakneck pace, in less than a month, on average, for existing homes three months for newly constructed homes,” he said. “Furthermore, homeowner’s equity in real estate has doubled over the past six years to nearly $16 trillion. But the number of potential buyers exceeds the number of homes available. We need to see sizeable growth in inventory, particularly on the entry-level home, to assure wider access to homeownership.”
Expectations for an expansion of the local new home inventory are increasing since a national home builder is currently involved in development in the Piney Flats area of Sullivan County. This is the first time a national builder has ventured into the local housing market.
Several local builders have also increased their output of patio homes and smaller single-family homes on smaller lots to target both the first-time new home buyer’s preferred price point and the type of housing seniors scaling back for retirement want.
So far, the Tri-Cities’ housing market has outperformed the other components of the local economy. Last year local residential and commercial deed transfers totaled $1.9 billion, according to the Appalachian Highlands Dashboard for Real Estate Analytics – a data solutions service enterprise by Don Fenley, supported by TechPoint Austin Ramsey and TCI Group Nina Heffner, and underwritten by Jerry Petzoldt TCI Group.
Categories: REAL ESTATE