Chattanooga, Tenn., home sales continued last month to rebound from the coronavirus-spurred slump in the spring, boosting the median price of homes sold during August to an all-time high.
The Greater Chattanooga Realtors association said home sales last month were up 2.4% from a year earlier to 1,057 even as the inventory of homes on the market continued to shrink. As a result, the median sales price for Chattanooga homes in August rose to $247,000, or 23.5% more than just a year earlier, as more buyers bid up the price for fewer homes.
"It's a combination of lack of inventory, low mortgage rates, and a lot of home buyers discovering Chattanooga and moving into the market," said Brandi Pearl Thompson, president of the Greater Chattanooga Realtors. "We're also in a unique time in that we have four or five generations of homebuyers in the market. The market has definitely bounced back and I expect that to continue, at least through the rest of this year."
As the inventory of homes on the market continues to shrink with fewer home buyers putting their houses on the market amid the coronavirus, the average home sold by a local Realtor took just 41 days to sell in Chattanooga.
The National Association of Realtors said Tuesday that sales rose 2.4% to a seasonally adjusted annual rate of 6 million homes sold last month. Sales are up 10.5% from a year ago and back to pre-COVID-19 levels of early 2020.
The median price for an existing single- family home nationwide reached $315,000 in August, up 11.7% from August 2019. Despite rising prices, the lack of available homes has buyers snatching them off the market faster.
"Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market," said Lawrence Yun, the chief economist for the National Association of Realtors. "Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery."
Yun said the need for housing will grow even further, especially in areas that are attractive to those who can work from home.
"Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities," he said. "To assure broad gains in home ownership, more new homes need to be constructed."
The number of homes for sale at the end of August — 1,565 — was nearly 25% less than the number of licensed Realtors in the market and Thompson said she fears the inventory of homes on the market could shrink below 1,300 houses by the end of the year.
Joel Kan of the Mortgage Bankers Association said the tight inventory bids up prices and that threatens to undermine the ability of many buyers, especially those buying their first home, from being able to make the down payment or monthly payments for such home prices.
"The 11% gain in prices [nationwide] is far above income growth and threatens overall affordability, especially for first-time buyers," Kan said.
