Tennessee Voices: Real Estate Roundtable
Real estate managers Steve Jolly, Furtesha Woods, Eric Wyse and Ana Maria Cortes spoke with Tennessee Opinion and Engagement Director David Plazas.
Nashville, Tennessee
- Existing home sales fell for the seventh straight month.
- Statewide, the median selling price for existing homes rose 7.7% year over year to $389,500.
- National inventories are directly affected by rising interest rates.
The Federal Reserve’s 0.75% interest rate hike on Wednesday will affect the economy in many ways, but the housing market will feel it first, according to National Association of Realtors chief economist Lawrence Yun.
“Higher mortgage rates always hurt home sales,” he said. “The Federal Reserve’s interest rate hike is having an impact on the economy, but there is a one to two year lag time to see the full effect. It is most sensitive to the real estate market and immediately reacts immediately to changes in monetary policy.”
Data released by real estate agents on Wednesday showed that the number of homes sold in the US fell for the seventh straight month. In addition, existing home selling prices rose 7.7% over the same period last year and home inventories fell after five months of steady monthly increases.
What does it all mean?
That means the housing market continues to be crazy and unpredictable. But there are a few takeaways from this data. Here’s what we know:
1. The current home inventory shortage is being fueled by rising interest rates.
At the end of August, 1.28 million homes were for sale nationwide, down 1.5% from July and flat from a year earlier. A normal home inventory should be a four to five month home supply. The market currently has a supply of about 3.2 months.
One would think that given the declining number of home sales, there should be an increase in homes on the market, but that’s not the case, Yun said.
“This is due to the homeowner lock-in effect,” he explained. “Homeowners have loved their low interest rates in recent years, and now with mortgage rates at 6%, they don’t want to give up their 3% interest rate. I think that will continue to have an impact on inventories going forward. I don’t know. I don’t see inventory going up because homeowners might delay moving.”
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However, stocks are increasing locally.
According to the latest RE/MAX National Housing Report, Greater Nashville’s housing stock hit its highest level of the year in August with more than 6,000 active listings on the market, up 140% year over year and the second largest increase in the US
Jeff Checko, RE/MAX Advantage’s director of relocation at The Ashton Real Estate Group, said it’s important not just to look at the increasing number of homes on the market, but to look at the bigger picture.
“It’s more important to look at months of supply,” Checko said. “We are currently sitting on 1.5 months worth of houses. This is nowhere near a neutral or buyers market. It’s still a solid seller’s market. We can’t even begin to discuss whether buyers will be in the driver’s seat until they have at least a four-month supply.”
2. Nationwide sales are down almost 20% year-on-year.
Year over year, nationwide home sales are down 19% year over year, marking the seventh consecutive month of declines. Month-to-month sales varied across the country, with the Northeast posting a 1.6% increase, the Midwest down 3.3% and the South showing no change. Despite the double-digit decline in sales since this time last year, overall home sales across the country were down just 0.4% from July.
Yun said while the decline this month has been mild, rising mortgage rates have clearly hampered the housing market.
“The drop from July is the weakest sales number we’ve seen since June 2020,” he said.
In August, existing home sales in the South were identical to July but down 19.3% from a year ago. The median price in the south was $356,000, up 12.4% from August 2021.
3. The average selling price for a home in August is the highest August reading ever.
The median selling price of existing homes rose 7.7% year over year to $389,500 in August. And that includes the expected drop in prices that is seen annually after the summer months.
While this marks 126 straight months of annual increases in average home prices, which is the longest on record, it was the second straight month that the average selling price fell after hitting a record high of $413,800 in June.
Melonee Hurt reports on the growth and development at The Tennessean, part of the USA Today Network – Tennessee. Melonee can be reached at [email protected]
