Chattanooga home buyers continued to push up home sales and prices last month, making 2016 a record year for Realtor-assisted sales in the region.
The Greater Chattanooga Association of Realtors (GCAR) said home sales were up 15.3 percent in November over the same month a year earlier, pushing overall sales in the first 11 months of the year to a record high of 8,650 residential units. Despite a declining inventory of homes on the market and rising home prices and mortgage rates, GCAR President Nathan Walldorf said home buyers are capitalizing on the improving economy and are eager to get ahead of what is expected to be even higher rates and prices next year.
"We really haven't had a lag month all year," Walldorf said. "We've had a great year in real estate."
The median price of homes sold in Chattanooga jumped nearly 14 percent last month from a year ago to $199,490, but that was still more than 15 percent below the U.S. median price.
Nationwide, the National Association of Realtors said Wednesday that Americans bought homes in November in the fastest pace in nearly a decade despite declining inventories of homes on the market.
Sales of existing homes rose 0.7 percent last month to a seasonally adjusted annual rate of 5.61 million. That was up from a downwardly revised 5.57 million in October and the highest since sales hit a 5.79 million pace in February 2007. Sales were up 15 percent from a year earlier.
"The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months," said Lawrence Yun, chief economist for the National Association of Realtors.
The sales gains have caused the supply of homes on the market to shrink. Fewer than 1.9 million homes were on the market during November, down 9 percent from a year earlier. The tight supply pushed the nationwide median price to $234,900 last month, up 6.8 percent from a year ago.
"We have a housing shortage," Yun said. "We are not building enough housing."
The inventory of homes on the market in Chattanooga was down 20.2 percent from a year ago to only 3,458 houses. The average monthly inventory of homes for sale locally has dropped from an average of 8.5 months in 2014 to an average of 5.7 months last year to only an average of only 4.3 months last month.
"The number of new listings coming on the market has been pretty flat all year and was actually down 4 percent in the month of November," said Mark Hite, a Keller Williams Realtor who will be president of GCAR next year. "There's been a huge decline in the number of homes that are on the market and, as a result, the days on the market for the average home fell to only 66 days (down from 81 days a year ago and 109 days two years ago).
At the same time, the rate on the benchmark 30-year fixed rate mortgage last week rose to a 52-week high of 4.16 percent. U.S. interest rates have climbed since the Nov. 8 election of Donald Trump. Investors have bid rates higher because they expect Trump's program of tax cuts and higher spending on defense and infrastructure will boost economic growth and inflation.
"If you are looking for mortgage rates under 4 percent you better look in the rearview mirror because they're not coming back," Hite said. "Rates are moving higher so if you are thinking about buying the next six to eight months are really going to be prime time because it's not going to get any cheaper."
The Realtors predict that higher rates and declining affordability in many parts of the country likely will lead to only a small gain in sales of existing homes next year - a 2 percent increase to about 5.52 million.
"Some prospective buyers are going to be straining to get to an affordable monthly payment with mortgage rates higher and may take a harder line on prices [or settle for less home] to make the numbers work," Stephen Stanley, chief economist at Amherst Pierpont Securities, said in a research note.
Entering the final month of the year, Chattanooga Realtors had already sold nearly as many houses as were sold in all of 2015, which was the highest year ever for Realtor-assisted home sales in Chattanooga. Last year, GCAR recorded 8,717 single-family home sales, or only 67 more than what was sold through November of this year. Home sales this month are expected to push the yearly total above last year's record, Hite said.
The Associated Press contributed to this report.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.