Sales of previously occupied U.S. homes plunged to their lowest level in more than 13 years in October as higher mortgage rates and rising prices deterred many would-be home buyers.
However, according to new sales figures compiled by the Greater Chattanooga Association of Realtors, the decline in home sales in the Chattanooga market was not as severe. Despite a 13.7% decline in home sales in the first 10 months of the year compared to a year ago, Chattanooga home sales in October were nearly 3% higher than in September.
Compared to a year ago, Chattanooga’s 3% decline in completed home sales last month was far better than the 14.6% decline in statewide home sales recorded by the National Association of Realtors.
Stephen Sharpe, a Keller Williams agent and president of the Chattanooga Realtors Association, said listings of new homes in Chattanooga were up 7.2% from a year ago and pending sales were also up from a year ago, as there are now more Houses are on the market.
“Buyers felt empowered as inventory supply increased 4.2% compared to 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 average sales prices were higher than a year ago.
— $315,000: The average price of homes sold in Chattanooga in October increased from $305,000 last year.
— 835: The number of home sales closed in Chattanooga in October fell from 860 last year.
— 797: The number of pending home sales last month in Chattanooga fell from 808 a year ago.
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 from the National Association of Realtors. According to FactSet, that is weaker than the pace of sales that economists had expected.
The last time sales fell this sharply was in August 2010, when the real estate market was recovering from a severe crash.
Home sales in the U.S. have declined for five straight months, held back by rising mortgage rates and low supply of homes on the market.
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“Lack of inventory and higher mortgage rates are really hindering home sales,” said Lawrence Yun, chief economist at the National Association of Realtors. “Given the lack of inventory, home sellers are essentially in charge.”
Despite the decline in sales, property prices continue to rise compared to this time last year. The national median sales price rose 3.4% from October last year to $391,800.
The average price of homes sold by Chattanooga real estate agents last month rose $12,500 from a year ago to $315,000.
Mortgage interest rates are falling
The real estate market got some good news on Wednesday with a new report from the Mortgage Bankers Association saying the contract interest rate on a 30-year fixed-rate mortgage fell 20 basis points to 7.41% last week.
The drop capped a four-week decline that was the largest in nearly a year and is triggering a new round of home purchase applications.
The home purchase applications index rose 3.9% in the week ended Nov. 17, the biggest increase since June.
“Maybe we will see some turnaround in affordability, but we still need inventory,” Yun said.
Since hitting a 23-year high of nearly 8% in mid-October, mortgage rates have fallen nearly half a percentage point. The effective interest rate, which includes fees and compound interest, fell to a still elevated 7.59%. In contrast, the five-year variable interest rate increased.
Mortgage interest rates tend to move in line with Treasury yields. The 10-year Treasury yield has fallen sharply this month after hitting a 16-year high in October, helped by signs that the economy is cooling along with inflation.
Lower mortgage rates can help borrowers save hundreds of dollars on costs each month. Despite the decline in mortgage rates last month, home mortgage rates are still below the record lows reached three years ago during the pandemic.
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More time to buy
According to the Greater Chattanooga Association of Realtors, homes in Chattanooga last month typically sold within 30 days of going on the market, up from the average sales time of 25 days last year.
The organization said sales continued to be weakest for the lowest-priced homes. Sales of homes priced between $100,000 and $250,000 fell 18% in October compared to a year ago. However, sales for homes priced at $1 million or more rose 9%.
Contact Dave Flessner at [email protected] or 423-757-6340.
Staff photo by Olivia Ross / Steven Sharpe, 2023 President of the Greater Chattanooga Association of Realtors.
Originally posted 2023-11-23 03:20:01.