The number of single-family homes sold by Chattanooga Realtors rose to a record high last year
Source: Greater Chattanooga Association of Realtors, Multiple Listing Service
Home sales by Chattanooga Realtors rose 11.4 percent last year to a record high as home buyers capitalized on historically low mortgage rates and improved economic and real estate markets to boost both the number and price of single-family homes sold during 2015.
The Greater Chattanooga Association of Realtors said Friday that last year's sales total of 8,717 homes surpassed the previous record for Chattanooga home sales set in 2006. The local gains in residential sales were nearly double the nationwide increase in home sales in 2015, according to figures released by the National Association of Realtors.
NAR said Friday that Americans bought roughly 5.26 million homes in 2015, a 6.5 percent increase over 2014.
While more homes were sold last year in Chattanooga, their median price also increased $10,000, or 7 percent, to $152,000 per unit sold. Chattanooga's median sales price — or the midpoint for the prices of all homes sold in 2015 — was still $80,400, or 31.2 percent, below the U.S. median price of $222,400.
"Mortgage rates have remained extraordinarily low, even with the rate increase by the Federal Reserve last year, and the economy seems to continue to improve in Chattanooga," said Nathan Walldorf, a broker for Herman Walldorf Real Estate who is the 2015 president of the Greater Chattanooga Association of Realtors. "I think the market is in a good place and we still have a lot of activity."
Lawrence Yun, chief economist of the National Association of Realtors, said Friday that December's jump in sales capped the best year for existing home sales since 2006 when Realtors sold 6.48 million homes nationwide.
"The prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year," he said, citing the Fed rate increase adopted last month.
One of the biggest problems for Realtors today, Walldorf said, is the lack of inventory on the market to sell to prospective buyers. After more sales and fewer home starts after the Great Recession, the volume of homes on the market has shrunk.
The number of previously owned homes on the market dropped nationwide to 1.79 million last month. At the current sales pace, it would take 3.9 months to sell those houses, the lowest since January 2005 and down from 5.1 months at the end of the prior month. Less than a five months' supply is considered a tight market, the Realtors group has said.
The Chattanooga Realtors' group said the average home sold through its multiple listing service last year was on the market just 80 days.
"We could use more inventory to maintain and grow our sales," Walldorf said. "If you have been on the sidelines waiting for a better time to sell your home, you should realize that home prices have appreciated nicely and interest rates are about as good as we're likely to see in some time."
Mortgage buyer Freddie Mac says the average rate on a 30-year fixed-rate mortgage declined to 3.81 percent this week from 3.92 percent a week earlier. The average rate has increased from its 3.63 percent average a year ago but remains well below its historic average of 6 percent.
Yun projects sales in 2016 will struggle to replicate last year's increase because interest rates may rise and a lack of supply is keeping prices elevated. NAR projects home prices will rise more than 4 percent next year but still increase far less than the 7.6 percent gain over the past 12 months.
Across the Chattanooga region, home sales grew the fastest in the northern end of Hamilton County and Sequatchie County. Sales declined last year in East Ridge, Collegedale, Lookout Mountain and St. Elmo, according to MLS data for 2015 compared with 2014.
The Associated Press contributed to this report
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