By DON FENLEY

TRI-CITIES, Tenn. – Northeast Tennessee new home sales surged to record levels in May while building permits, a sign of future construction, fell. The permit decline was uniform for East Tennessee’s four metro areas, according to the Census Bureau.

The construction pace – compared to the first five months of last year – for single-family homes was down:

• 17% in the Johnson City metro.
• 2% in Kingsport-Bristol.
• 4% in Knoxville.
• 4% in Morristown.

Multi-family permits were down:

• 4% in the Johnson City metro area.
• 2% in Kingsport-Bristol.
• 4% in Knoxville.
• 5% in Morristown.

Total permits for privately owned construction were down:

• 2% in the Johnson City metro.
• 9% in Kingsport-Bristol.
• 8% in Knoxville.
• 24% in Morristown.

Overall, new home demand continues to be robust, and some builders are pulling back on sales incentives such as price cuts, according to the National Association of Home Builders (NAHB). D.R. Horton, the region’s largest builder, raised its full revenue and homes closed forecast based on strong demand and improvement in labor and construction supplies.

The Northeast Tennessee Associations of Realtors (NETAR) pending sales index points to a weaker market during what is typically the busiest months of the year. June’s pending sales declined 8.3% from May and down 2.2% from last year.

Last month’s active existing home inventory was 1,299 listings. The lack of listings in the affordable market has pulled the overall market to less than two months of inventory since November 2020. Inventory in the move-up and luxury market has increased in the bottom level of balanced market conditions. The same pattern exists for home sales. They’re down in the affordable market and up in the move-up market.

There are currently 350 Realtor.com new construction listings in the Tri-Cities area. The largest stock is in Kingsport – 183 listings. Greeneville has 87 listings, and there at 55 in Johnson City.

Two opposing market dynamics are at play in the increasing sales, slower construction pace issue. Many local homeowners – like those in markets across the nation – are reluctant to sell because they’re sitting on mortgage rates that don’t want to give up. About 12,000 of the region’s mortgaged homes are at a 4% or lower mortgage rate.

Categories: REAL ESTATE