By Mark Hite
President, Greater Chattanooga Association of REALTORS®
May was the third month this year that residential home sales ended in the negative column, when compared to the same period last year.
There were a total of 925 closed units in May, compared with 945 in 2016 for a -2.1% decrease. This modest monthly decrease in home sales leaves the region up +1.2% Year to Date, which is good news for home sellers. After declining for 3 straight months, pending units (those properties which have a contract to purchase written, but not yet closed) increased by +6.8%. This positive number is a good sign as we enter the critical summer selling season.
While there may have been fewer homes close in May than last year, the homes that closed went under contract quickly! The average Days On Market (DOM) for the month of May came in at 56 days, which is a -17.6% decrease compared to last year's average. The two year progression came down from 68 DOM in 2016 and and 77 DOM in 2015.
To give some additional perspective to DOM, let's break it down and look at some different price ranges of homes sold in Hamilton County in May. If we look at homes which sold between $150,000 and $200,000 the average DOM was a rapid 36 days. Step up to $250,000-$300,000 and the DOM jumps to 65 days on average. Pushing into the luxury price range of homes which closed over $500,000 and the average home closed in 76 days.
Prices increased over last year, but not at the record setting levels the market has been experiencing. The median home price finished the month at $177,000 for a +6.6% increase and the average price came in at $206,383 for a +4.5% increase over May 2016. Compare these monthly averages to the YTD increases of +10.4% and +10.0% respectively. A slow down in the rate of price increases is actually a good thing for the market. When prices out pace wage growth for an extended period of time, affordability declines and buyers begin to be eliminated from segments of the market.
On the inventory side of the equation, there were 1,281 new properties come to market in May verses 1,318 in 2016. This level of production represents the strongest month we have seen this year. The new inventory coming to market did not make a dent in the overall inventory of homes available for sale, which came in at 2,960 and represents a -24.7% decrease to last year. The Months of Supply, based on the current rate of sale was once again at 3.6 months, for what is considered a Sellers market.
With a shifting real estate market like we are currently working in, both home buyers and sellers need the insight of an experienced and well trained member of the Greater Chattanooga Association of Realtors.