Slowing nonfarm job growth, higher mortgage rates, poor weather and higher home prices combined to rein in Tennessee’s housing market activity during the first quarter of 2014, according to the latest report from the Business and Economic Research Center in MTSU’s Jones College of Business.
Single-family home construction activity declined, continuing a trend of lower activity that began last fall, reports Dr. David Penn, director of BERC, who noted that home sales dropped for a second quarter, and real estate–related tax collections declined.
“Most, but not all, indicators show that economic activity slowed in Tennessee during the first quarter,” Penn stated.
“Rising home prices seem to hurt buyers more than help sellers, as jobs and incomes are not growing fast enough to offset the effects of higher mortgage rates and higher home prices on the monthly payment for a new home.”
Statewide, home prices are 2.5 percent higher year over year, with the Nashville Metropolitan Statistical Area — with a 5.7 percent gain — as the only metro area of the 10 MSAs in Tennessee to show price growth faster than the U.S. average of 4.8 percent, the report states.
As for positives, multi-family construction roared ahead, in tandem with the national trend, Penn said. The state’s unemployment rate dropped significantly to 6.9 percent, a full percentage point lower than the previous quarter.
“And households are in no worse shape in terms of affording the mortgages currently in place, as mortgages past due fell again and foreclosures were little changed from the previous quarter,” the report states.
View the full housing report at http://capone.mtsu.edu/berc/housingbrief.html.
View a chart on job growth by industry in the state’s 10 Metropolitan Statistical Areas at http://www.mtsu.edu/~berc/tacir/tennesseejobs.html.