Home starts in Hamilton County over the past three years jumped by nearly 44% above prepandemic levels, remaining among the best years for home starts ever in both 2022 and 2023 despite a slight decline from the peak reached in 2021, according to building permit data compiled by county planners.
Higher home prices and mortgage rates have made buying a home less affordable for first-time buyers. But a housing economist projects Chattanooga’s real estate market will continue to grow in the next year as more millennials, relocating workers and retirees buy homes as builders add to the inventory of houses on the market.
Economist Jessica Lautz — speaking at the 10th annual Economic Outlook luncheon Friday at the Chattanooga Convention Center — said mortgage rates won’t necessarily decline much, if at all, and home prices could increase even more in the next year.
“I think mortgage rates are already baked into the expected decline in Fed rates,” said Lautz, the vice president of research for the National Association of Realtors. “Even though we do not expect mortgage rates to decline much more than where they are right now, we do expect home sales to be picking up next year because of improving inventory and the fact that mortgage rates are still down from a year ago and below their long-term average.”
The rate on 30-year home loans, although double from the pandemic low three years ago, is still well below the 50-year long-term average rate of 7.7%, Lautz said.