May home sales lumber into peak buying, selling season
Published 9:38 am Wednesday, June 7, 2023
The Northeast Tennessee and Southwest Virginia housing market lumbered into the height of the prime home buying and selling season in May. There were more sales than during April. But fewer than last year. Prices continued to be sluggish but increased enough to equal the all-time record set in May last year.
Northeast Tennessee Association of Realtors (NETAR) President Jan Stapleton said, “So far, it has been a lethargic market. It’s still a seller’s market. It’s a frustrating market due to higher mortgage rates, listless inventory increases, tougher lending standards and dropped deals due to the failure of homes to pass inspections. Realtors’ biggest challenge is finding the right home for their clients.” And for those waiting for prices to come down, “it may be a long wait. Prices are the last thing to adjust to market changes.”
There were 729 closings last month. That’s 134 more than during April and 71 fewer than last year. It was the fewest number of May sales since 2018 when the year-to-date sales were up 9.3%. So far this year, they’re down 20.8%. May’s median sales price was $250,00, up $1,400 from April and the same as it was at the all-time high set of May last year. “The median price has vacillated in the $210,000 to $250,000 range for 19 months,” Stapleton said. The median sales price is the middle of the market where half of the sales were for more and half were for less.
Market watchers don’t expect much price movement until inventory moves out of its 24-month trough of less than two months’ supply and/or a big demand decrease. “So far there is no sign either is changing much,” Stapleton added. The best odds for lower prices will be the fall and winter months when the market makes its seasonal slowdown, she added.
A drill down on May’s sales shows a continued downward trajectory from last year. That was expected since it’s a comparison of this year’s moderating market to one that was still very hot during the first half of last year:
• The affordable market was down 10% from last year.
• The move-up market was down 2% but included a small increase (2.9%) in the $300K-to-$400K price band.
• The luxury market was down by 9%.
May’s active inventory was 22% better last year. But the increase is not across all price bands. It was good news for those in the move-up and luxury markets and not-so-good for those looking in the affordable market.
• Affordable market listings are down 11% from last year.
• Move-up market listings are up 53%. The greatest number of listings is in the $300K-to-$400K price band.
• Luxury listings are up 52% from last year.
At the end of May, the region had 1.8 months of inventory. That’s how long it would take to sell everything at the current sales pace. A market with balanced market conditions typically has five to six months’ inventory. NE TN – SW VA hasn’t had balanced conditions since the first quarter of 2018.
The typical home that sold in May was on the market for 49 days compared to 42 days last year. The longer a listing is on the market, indicates weakening demand.
A little more than half (51 percent) of May’s existing home sales were discounted to seal the deal. The median discount was $11,900.
Above list sales accounted for 29% of all sales. The median above-list sale price was $6,74.