The colder winter weather last month didn't do much to cool Chattanooga's red hot housing market with the new year starting better than the record sales year in 2021 and median home prices in Chattanooga reaching an all-time high in January.
Home sales by Chattanooga Realtors were up 4.3% in January compared with a year earlier, even with 35% fewer homes on the market. As a result, the median sales price of homes sold in Chattanooga jumped to a record high of $290,000, or 23.4% more than a year ago.
Real estate agents closed on 783 home sales in January with another 961 sales pending at the end of the month, according to the January activity report by the Greater Chattanooga Realtors. The inventory of Chattanooga area homes for sale dropped to 775, which is about a third as many homes as there are licensed real estate agents in the Chattanooga area.
The typical home sold in 21 days, which is about half the sales time it took a year ago to sell the average home and far quicker than normal for January, which is traditionally a slower selling month for real estate.
"Competition in the real estate market remains fierce, and it's a challenging market with more buyers than sellers right now," said Derek English, president of the Greater Chattanooga Realtors, in a phone interview. "But I'm still optimistic about the market. Spring is just around the corner, and like its namesake, we hope to see a bounce of increased homes coming onto the market in the coming months."
Mark Hite, who heads one of Chattanooga's top-selling real estate teams at Real Estate Partners, said a house his firm listed starting Monday at $199,000 in Cleveland, Tennessee, had several showings in the first hour it was on the market and attracted several purchase offers within three hours.
"Quality, affordable homes are selling very quickly," Hite said during a phone interview.
Nonetheless, Hite said the uptick in mortgage rates and continued increases in home prices may be beginning to cool the market. Although closed sales were up in January, reflecting listings and sales agreements typically made near the end of 2021, pending sales among Chattanooga Realtors last month were down from a year ago by nearly 2%.
"There may be the beginnings of some hesitancy," Hite said. "I don't think we'll see a big correction or a drop in sales price, but we may see somewhat of a balancing because we can't continue to see these big double-digit price increases."
According to the latest quarterly report from the National Association of Realtors, the median single-family existing-home price nationally rose 14.6% year-over-year to $361,700.
"The increasing prices are indicative of a seller's market, with an abundance of eager buyers and very limited supply," Lawrence Yun, chief economist for the National Association of Realtors, said in a report last month.
The association said 2022 began with an existing home inventory of 910,000, the lowest level recorded since 1999.
Although Chattanooga's median home price gain of 15.5% in the fourth quarter was even bigger than the U.S. average, Chattanooga's median home price in the fourth quarter of $269,900 was still priced 25.4% below the U.S. average.
English, the Greater Chattanooga Realtors association president, said the city is seen as a relative value to many transplanted home buyers, and the region's above-average job growth should continue to prop up the housing market.
But higher home prices and rising mortgage rates are likely to dampen buyer enthusiasm as the year progresses, English said.
"The good news is that home prices should begin to normalize later in 2022 as more homes come on the market," Yun said.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340. Follow him on Twitter @dflessner1.