Across the country, consumers are feeling the bite of inflation and surging mortgage interest rates. According to Freddie Mac, rates recently hit 4.6 percent in March, rising 1.4 percent since January and the highest rate in more than three years. So far in April we are seeing a continued track upwards in interest rates. These increases are naturally causing monthly payments to rise significantly compared to this time last year. As housing affordability declines, an increasing number of would-be homebuyers are turning to the rental market, only to face similar challenges as rental prices skyrocket, and vacancy rates trending downward to near-record low.
Home sales have been brisk so far in 2022 and the early pace seems to be slowing on the national level. We have seen home sales dip by 7.2 percent to a six-month low. Buyers are struggling to find a home amid rising prices and historic low inventory. Pending sales are also down, declining 4.1 percent, according to the National Association of REALTORS®. Builders are working hard to ramp up production, and the U.S. Census Bureau reports housing starts are up 22.3% compared to a year ago. However, higher construction costs lend to increased sales prices, which in turn hampers new home sales, despite high demand for additional supply.
For the first time in the Greater Chattanooga area, the Median Sales Price of a home surpassed $300,000, reflecting these increased costs and lower inventory. This Median Sales Price is an 18.5 percent increase in just one year, with the March 2021 Median Sales Price being just over $253,000. However, there are some hopeful signs for inventory concerns. Spring is in the air, and as I mentioned in early March, new properties will be making their way onto the market over the next few months.
While the economy and real estate news nationally is alarming. New Listings in the Chattanooga region increased 6.7 percent to 1,310 in March. Pending Sales were up 6.0 percent to 1,174. Inventory levels shrank 28.8 percent to 810 units from last year at this time but are up from our February inventory numbers. For comparison, in March of 2021, there were 1,138 properties for sale.
Prices continued to gain traction. Days on Market is down 42.4 percent to 19 days from March of 2021 and is holding steady with similar numbers as earlier in the year. Months Supply of Inventory is also maintaining levels of 0.7 months of active inventory in our Chattanooga market.
The data shows that this remains a seller’s market, and Realtors are working tirelessly to help their clients get the house they desire, even in this competitive market. No matter your needs, it’s crucial to consult a Realtor®. A Realtor will work with you to ensure your housing needs are taken care of. That’s Who We R®.