Pending home sales increase – workforce-affordable, move-up, luxury markets up

By DON FENLEY

GRAY – Pending sales increased during December, pointing to a stronger evolving housing market.  Accepted contracts in all three sub-markets were higher also than last year.

The Northeast Tennessee Association of Realtors (NETAR) Pending Sales Index, which benchmarks the market to its 2018 annual average, increased 18 points. That parallels the year-to-date raw and 3-month moving average metrics that have tracked a five-month decline that pushed sales to a pre-pandemic level. While the index points to a market that’s not as strong as its 2018 average, it’s December performance is more robust than this time last year.

Buyers accepted 527 contracts – 81 fewer than they did in November and 125 more than this time last year.

Pending sales represent homes that have a signed purchase contract but have not closed. Accepted contracts typically close in a month to six weeks. It’s not unusual to see up to 5% of the new contacts fall through before closing.

NETAR’s Pending Sales Index declined 13 points from the previous month; however, it’s 18 points higher than it was during Dec. last year. The index removes some of the noise from the monthly raw numbers and benchmarks how the market is performing against a pre-pandemic average baseline. The index is a forward-looking indicator based on the 2018 annual average for signed contracts instead of closings. An index of 100 is equal to the pre-pandemic level. An index of over 100 is the percentage increase, below 100 is a decline.

Dec.’s mid-month report also revised the number of closings up by 12. And there was an increase of $6,301 in the median sales price. Mid-month data typically sees changes after closings filed too late for the first-of-the-month tally are included.

The current median price and sales numbers for last month are: 560 existing single-family and condo sales with a median sales price of $257,750.

New contracts in the workforce and affordable market increased 19.6% to 171. The biggest increase (34 contracts) came in the $140K to $159K price range.

The move-up market’s pending sales were up 64% (223). The largest increase (109 contracts) was in the $300K-$400K price range.

Sellers in the luxury market accepted 13 more contracts than this time last year – up 34%. Currently, there are 340 active listing in the $500K and up luxury market.

Although there were fewer home sales in December than the previous month, they took a bigger bite out of an inventory increase progressing at a snail’s page. Keys to the early months of this year’s prime real estate buying and selling will be the market’s ability to increase enough inventory to meet the expected pent-up demand. Pressure in that demand is building with a declining mortgage rate trend.

According to National Association of Realtors researchers, if the mortgage rates settle in the 6% to 6.5% range, it would bring about 10,000 Tri-Cities area existing buyers back into the market. That does not include demand from new residents.