Chattanooga home prices rose by twice the overall rate of inflation in the past year but remained nearly 30 percent cheaper than the U.S. average and below most other metropolitan cities in the Mid-South, according to a new report by the National Association of Realtors.
The median sales price of the single-family homes sold through the Greater Chattanooga Realtors multiple listing service this spring rose 5.8 percent from a year ago to $188,600. The increase was more than double the average 2.9 percent increase in income, according to the U.S. Bureau of Labor Statistics.
Rising home prices
The median price of houses sold by Realtors during the second quarter of 2018 outpaced the 2.9 percent general inflation rate in the past year in all in major cities in the Mid-South.* Nashville, $263,200, up 5.9 percent from a year earlier* Atlanta, $228,800 up 11.7 percent from a year earlier* Birmingham, Alabama, $214,800, up 4.2 percent from a year earlier* Huntsville, Alabama, $196,200, up 10.8 percent from a year earlier* Knoxville, $190,100, up 6.6 percent from a year earlier* Memphis, $189,100, up 10.3 percent* Chattanooga, $188,600, up 5.8 percent from a year earlier* U.S. average, $269,000, up 5.3 percent from a year earlierSource: National Association of Realtors
Home prices are rising as the inventory of houses on the market continues to shrink with more people moving into Chattanooga than the number of new homes being built.
"We have one of the lowest inventory of homes on the market that I can ever remember, and that means there are more buyers competing for each home on the market," said Geoff Ramey, a Re-Max Properties agent who is president of the Greater Chattanooga Realtors association. "We used to have 7,000 or so single-family homes on the market and now we only have about 2,600 or so."
Across the country, the National Association of Realtors said Wednesday that single-family home prices in the second quarter rose in 90 percent of the measured markets. The average home was priced 5.3 percent above a year ago, rising to a record high of $269,000.
Lawrence Yun, NAR chief economist, says this year's spring buying season did not meet expectations, despite very strong demand.
"The ongoing supply crunch affecting much of the country worsened for most of the second quarter, as the growing number of interested buyers in many markets overwhelmed what was already a meager level of available listings," Yun said in a report Wednesday. "With not enough homes for sale, multiple bids caused prices to rise briskly and further out of the reach of some prospective buyers."
Total existing-home sales, including single family and condos, decreased 1.7 percent to a seasonally adjusted annual rate of 5.41 million in the second quarter from 5.51 million in the first quarter, and are 2.4 percent lower than the 5.55 million pace during the second quarter of 2017.
"Solid economic growth, a healthy labor market and the large millennial population should be driving home sales much higher," Yun said. "As long as economic conditions maintain current levels, there's still a chance for sales to break out this year. However, with mortgage rates trending higher, it will only happen if supply levels improve enough to cool the speedy price growth in a majority of the country."
Home prices are rising in most Mid-South market faster than in Chattanooga, which maintained the lowest average home price among Tennessee's four major metro areas, according to the Realtors data.
"Even with the increases we've seen, you can still get a lot more bang for your buck in Chattanooga than in most other cities," Ramsey said.
Nationwide, the most expensive cities for housing in the second quarter were San Jose, California, where the median existing single-family price was $1,405,000 and San Francisco, where the median home sold for $1,070,000.
The lowest-cost metro areas in the second quarter were Youngstown-Warren-Boardman, Ohio with a median home price of 94,400 and Cumberland, Maryland, where the median home sold for $94,900.
Contact Dave Flessner at email@example.com or at 757-6340.