Chattanooga housing market heats up: Builders busy in Scenic City

Chattanooga housing market heats up: Builders busy in Scenic City

July 26th, 2013 by Ellis Smith in Business Around the Region

Photo: Getty Images/iStockphoto A roof frame stands atop this new building.

The summer heat is warming up the Scenic City's housing market.

Home starts are up 13 percent in Chattanooga from the prior year, on pace to exceed the number of new homes started in 2012 as the summer buying season kicks in.

Led by big gains in Bradley and Catoosa counties, the Chattanooga area chalked up 798 new building permits year-to-date, up from 701 at the same point in 2012, according to research firm The Market Edge.

"The economy, which generates the jobs that fuel housing demand, continued to improve at a moderate pace during the second quarter of 2013," said Mark Blazek, president of the Greater Chattanooga Association of Realtors. "Budget sequesters and sluggish export growth have taken a back seat to housing recovery and stronger consumer spending."

Home starts in fast-growing Bradley County jumped to 152, up from 119 through the second quarter of 2012.

New listings in the Chattanooga market were up 12 percent to 1,161, as the inventory of available homes shrunk by 12 percent to a nine-month supply, or 5,092 homes. The median price of a home in the Chattanooga area climbed 7 percent to $151,500.

Despite the smattering of good news, the number of closings decreased 6.3 percent in June to 638 sales from the prior year, and pending sales decreased by 36 percent to 405 homes under contract.

"The reason why our closed sales were down, is foreclosures and short sales have slowed down so much," Blazek said.

Only 119 foreclosed homes were sold in June, down from 151 foreclosed home sales in May, and down from 186 foreclosures sales in June 2012, according to Chattanooga MLS figures.

And for the entire first half of the year, pending sales are down just 1 percent and closings are up 11 percent, buoyed by unusually strong sales in the winter and spring months.

Interest rates, which have long hovered near historic lows, are poised to rise slightly, Blazek said, which could raise the price of a home loan.

"Interest rates could flirt with 4 percent or 4.25 percent again, but the days of 3.3 percent interest are likely behind us," he said.

The Scenic City fell behind Knoxville for home starts during the quarter, where the number of home starts jumped 23.3 percent to 1,134 for the year so far. That reversed a 2012 trend that saw Chattanooga trouncing its larger northern neighbor in the real estate race.

Contact staff writer Ellis Smith at esmith@timesfreepress.com or 423-757-6315.