Home sales and prices continues to rise last month in Chattanooga despite a dip in housing sales across the country as a whole.
Chattanooga Realtors sold 5.6% more homes during February than they did a year ago while median home prices in the Chattanooga region were up an average of 22.4% over the past 12 months to tie the record-high price set in January of $290,000 for a typical single-family residence. According to the Greater Chattanooga Association of Realtors, the typical home sold in 21 days last month.
"Chattanooga is a very desirable mid-size city that buyers from all over the country are considering as their relocation destination," said Derek English, a real estate agent with the Scout Realtor Group who is president of the Greater Chattanooga Realtors association. "However, the Chattanooga market is still suffering from an inventory shortage and the limited number of active listings is driving up prices in most, if not in all price points. We have seen this trend through the early part of the year as February's sales number continued to rise."
Last month ended with only 759 houses listed for sale by Chattanooga area Realtors, or less than 40% as many homes for sale as there are real estate agents in the market trying to sell those properties.
The tight inventory is pushing up Chattanooga home prices, but the local market remains priced 30% below the U.S. median home price in February of $357,300, which was up 15% from a year ago.
The National Association of Realtors reported Friday that sales of previously occupied U.S. homes fell in February as competition for a near-record low number of properties on the market drove prices higher and rising mortgage rates kept would-be buyers on the sidelines.
Existing home sales fell 7.2% last month from January to a seasonally adjusted annual rate of 6.02 million. That's less than the roughly 6.1 million sales that economists had been expecting, according to FactSet.
"As a buyer, it's still a struggle to get into the market with the lack of inventory," said Lawrence Yun, NAR's chief economist.
The number of homes for sale across the country at the end of February totaled just 870,000. That's just 2.4% above the record low set in January on data going back to 1999. The inventory of unsold homes was down 15.5% from February 2021.
On average, homes sold in 18 days of hitting the market last month, according to NAR figures.
Real estate investors accounted for 19% of transactions in February, up from 17% a year ago. First-time buyers, meanwhile, made up only 29% of all homes sold last month.
"First-time buyers are struggling to try to get into the market," Yun said.
Housing market demand looks to remain healthy this year, bolstered by ongoing demographic change as younger millennials and Gen-Zers come of age and look to become homeowners. But with housing in short supply since well before the pandemic and now higher interest rates, the limits of what house hunters can afford will be constrained, especially first-time buyers.
The average rate for the benchmark 30-year mortgage rose to 4.16% this week, moving above 4% for the first time since May 2019, according to mortgage buyer Freddie Mac. A year ago, the average rate stood at 3.09%.
That increase in the cost of financing a home is on top of the higher costs consumers are facing with inflation running at the highest level in decades.
Yun estimates that the rise in rates and escalating prices have pushed up the monthly payment on a home 28% from what it was a year ago.
- Compiled by Dave Flessner