Chattanooga homes sales decline but prices remain elevated

Mortgage rates drop in past month from summertime high

Staff Photo by Dave Flessner / New homes being built on Black Creek Mountain, like the one shown here last month being listed by Caldwell Banker Realtors, are helping to add to the inventory of houses on the market in Chattanooga.  Home sales in Chattanooga are down 13.7% so far in 2023 from the near-record highs in 2022, but median home prices increased in October to $315,000
Staff Photo by Dave Flessner / New homes being built on Black Creek Mountain, like the one shown here last month being listed by Caldwell Banker Realtors, are helping to add to the inventory of houses on the market in Chattanooga. Home sales in Chattanooga are down 13.7% so far in 2023 from the near-record highs in 2022, but median home prices increased in October to $315,000

Sales of previously occupied U.S. homes slumped in October to their slowest pace in more than 13 years as higher mortgage rates and rising prices kept many prospective homebuyers on the sidelines.

But the decline in home sales was not as severe in the Chattanooga market, according to new sales figures compiled by the Greater Chattanooga Association of Realtors. Despite a 13.7% drop in home sales in the first 10 months of the year compared with a year ago, October home sales in Chattanooga were up nearly 3% from September's total.

Compared with a year ago, Chattanooga's 3% decline in completed home sales last month was far better than the 14.6% decline in home sales nationwide recorded by the National Association of Realtors.

Stephen Sharpe, a Keller Williams broker and president of the Chattanooga Realtors association, said new home listings in Chattanooga increased 7.2% over last year and pending sales were also up from a year ago as more homes are now on the market.

"Buyers felt empowered as the supply of inventory was up 4.2% from October 2022 (from 2.4 to 2.5 months)," Sharpe said in a new report on October sales activity.

Chattanooga home sales by the numbers

Home sales were down in October, but median sales prices were up from a year ago.

— $315,000: Median price of homes sold in October in Chattanooga, up from $305,000 a year earlier.

— 835: Number of home sales completed in October in Chattanooga, down from 860 a year earlier.

— 797: Number of pending home sales last month in Chattanooga, down from 808 a year earlier.

Source: Greater Chattanooga Association of Realtors

Nationwide, existing home sales fell 4.1% last month from September to a seasonally adjusted annual rate of 3.79 million, according to a new report by the National Association of Realtors. That's weaker than the sales pace economists were expecting, according to FactSet.

The most recent time sales slumped as hard was in August 2010 when the housing market was in recovery from a severe crash.

U.S. home sales have fallen five months in a row, held back by climbing mortgage rates and a thin supply of properties on the market.

(READ MORE: Who are the top selling Realtors in Chattanooga)

"Lack of inventory along with higher mortgage rates are really hindering home sales," said Lawrence Yun, the National Association of Realtors' chief economist. "Given the lack of inventory, home sellers are essentially in the driver's seat."

Despite the decline in sales, home prices keep climbing compared with this time last year. The national median sales price rose 3.4% from October last year to $391,800.

The median price of homes sold last month by Chattanooga real estate agents was up by $12,500 from a year ago to $315,000.

Mortgage rates drop

The housing market got some good news Wednesday with a new report from the Mortgage Bankers Association that the contract rate on a 30-year fixed mortgage tumbled 20 basis points to 7.41% last week.

The decline capped a four-week slide that was the biggest in nearly a year and is spurring a fresh round of applications to purchase homes.

The index of home-purchase applications increased 3.9% in the week ended Nov. 17, the most since June.

"Maybe we will begin to see some turnaround in affordability, but we still need inventory," Yun said.

Since reaching a 23-year high of nearly 8% in mid-October, mortgage rates have plunged nearly half a percentage point. The effective rate, which includes fees and compound interest, dropped to still-elevated 7.59%. In contrast, the five-year adjustable rate increased.

Mortgage rates tend to move in tandem with Treasury yields. The 10-year Treasury yield has fallen steeply this month after hitting a 16-year high in October, helped by signs the economy is cooling along with inflation.

Lower mortgage rates can help save hundreds of dollars a month in costs for borrowers. Despite the decline in mortgage rates over the past month, home borrowing rates are still below the record lows reached three years ago during the pandemic.

(READ MORE: Road opens up Black Creek Mountain)

More time to buy

Homes sold last month in Chattanooga typically within 30 days after hitting the market, up from the 25-day average selling period a year earlier, according to the Greater Chattanooga Association of Realtors.

The organization said sales remain weakest among the most affordably priced homes. Sales for homes priced between $100,000 and $250,000 sank 18% in October from a year earlier. However, sales jumped 9% among homes priced at $1 million or above.

Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.

  photo  Staff Photo by Olivia Ross / Steven Sharpe, 2023 president of the Greater Chattanooga Association of Realtors.
 
 

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