Two months into the 2013, the local housing market is looking better than years past, recently released data shows.
While Rutherford and surrounding counties showed double-digit decreases in home sales from December 2012 to January 2013, the year-over-year growth should be celebrated, explains local real estate expert Steven Dotson in his monthly edition of The Red Report.
A total of 242 homes were sold in Rutherford County in January, compared to 183 and 169 in 2012 and 2011, respectively, showing a 32 percent growth in sales.
Similar data was shown for Williamson (14 percent increase), Davidson (14 percent increase) and Wilson (22 percent increase) counties.
“January did drop lower than December, but that is expected and happens just about every year,” Dotson says. “The big news is we continue to see year to year increases for the same months. Last year was a huge year with 27 percent increases. I don’t predict 2013 will have the same large increase over 2012, but it appears we are going to continue to see an increase in volume this year.”
The four counties combined show a 19 percent increase in sales from January 2012 to January 2013.
Pending home sales last month prove promising for February closed sales.
Rutherford County pended 352 sales, or 17 percent more than those pended in December.
Davidson County took the lead with 560 pending sales, followed by Williamson County with 277 and Wilson County with 138 home sales pending.
“The pendings show February will see increases in all the counties except Wilson, but Wilson may still see an increase over last year,” Dotson said.
He added, 33 percent of homes are sold within 30 days.
Additionally, existing inventory in all four counties combined is down 16 percent during the same time period. Lowered inventory typically drive new construction, and in this case, it means a 40 percent combined spur in building permits.
Rutherford County issued 1,290 building permits, up from 820 in 2012.
Williamson County took the lead this time with nearly 1,600 permits, compared to 1,067 last year.
Additionally, 1,278 permits were issued in Williamson County, compared to 1,014 in 2012, and Wilson County government approved 764 building permits, up from 615 during the same time last year.
The Tennessee Housing Market Brief published by MTSU’s Business and Economic Research Center provided further details about state-wide new home construction.
According to its newest report, permits issued for single-family construction rose to an annual rate of 15,400 units in the fourth quarter last year – a level of activity not seen since 2008.
“Over the year, single-family permits are 20.2 percent higher as home builders catch up with pent-up demand boosted by mildly rising incomes and extremely low mortgage rates. Single-family construction rose even faster in the South (22.8 percent) and the United States (26.5 percent) over the year,” the report states.
Permits issued for multi-family housing slowed during the quarter, dropping to an annual rate 4,100 from the recent peak of 5,500. Consequently, total permits (single family plus multi-family) rose 11.7 percent for Tennessee, about half the rate of growth for the South and the United States.
The Red Report shows home sale prices increasing in Rutherford (2 percent), Davidson (13 percent) and Wilson (4 percent) counties, while Williamson County showed an 11-percent decrease.
Additionally, home prices increased in four of 10 metropolitan areas in Tennessee during the third quarter, with some metropolitan areas showing renewed price weakness according to the Federal Housing Finance Agency all-transactions price Index.
The Johnson City MSA showed the strongest gain at 2.48 percent, with the Nashville MSA up 1.2 percent over the year and Clarksville and Kingsport-Bristol producing smaller increases.
According to the report, home prices for the state are slightly lower over the year.
“It appears that the road to higher home prices will not be easy to follow, with good quarters followed by weaker quarters,” BERC Director David Penn stated in the report.
Overall, the housing market continues to improve in Tennessee, especially single-family home construction, Penn concluded.
“Sales of homes in the three largest metropolitan areas are still improving, and inventories of unsold homes are falling,” he continued. “The tightening supply relative to demand should place upward pressure on home prices in coming months. However, prices backslid in some MSAs during the latest quarter.”
As the housing market is closely related to employment factors, Penn spoke to manufacturing and professional services, which are generating jobs at a high rate. However, some service sectors are lagging, including government.
“The outlook for federal fiscal policy has improved somewhat, offering both households and businesses a small taste of policy certainty,” he stated. “However, further government spending cutbacks that are likely to occur this year will put the break on more rapid job growth.”