Buoyed by the lowest mortgage rates in nearly three years, home sales in Chattanooga rose last month by 9.6% over the previous year even as the median price of homes sold by Realtors jumped by 12.7% in the past 12 months to an all-time high.
The typical Chattanooga single-family home sold by Realtors in July was priced at $210,250, up $23,750 from a year earlier, according to the Greater Chattanooga Realtors' association's multiple listing service. Despite the jump in local home prices, the median price of a typical home in Chattanooga was still priced nearly 30% below the U.S. level last month.
"The Greater Chattanooga area market remains hot, and the increase in inventory and the increase in homes sold reflect that," said Kim Bass, an affiliate broker for Group Real Estate Brokerage and president of the Greater Chattanooga Realtors Association.
The average rate on a 30-year fixed rate mortgage fell below 4% last week for loans of $484,000 or less, according to the Mortgage Bankers Association (MBA). Rates are even lower on larger mortgages and on 15-year loans.
That sparked a 37% jump in the number of refinancing loans last week compared to the previous week, according to the MBA. New home loans were up p 2% from the previous week and 12% from a year ago.
In the Chattanooga area, the higher prices appear to be spurring an increase in homes on the market, both from builders starting more new homes and existing homeowners convinced it may be a good time to sell with prices on the rise.
New listings in the Chattanooga region increased 3.3% to 1,300. But inventory levels in the Chattanooga area shrank 8.4% to 2,770 units, reducing the average inventory supply by 13.9% from a year ago to 3.1 months.
Nationwide, the inventory of homes is still below what is needed to meet the demand and home starts actually fell across the United States in the first six months of the year compared with a year ago, according to the National Association of Realtors (NAR).
Lawrence Yun, chief economist for NAR, said home builders must bring more homes to the market.
"New home construction is greatly needed, however home construction fell in the first half of the year," he said. "This leads to continuing tight inventory conditions, especially at more affordable price points. Home prices are mildly re-accelerating as a result."
Selling times for homes in Chattanooga did take a bit longer than last year with the average number of days on the market in Chattanooga up 5% from a year ago to 42 days. That is still only about a third of the average sales time it took to sell a house a decade ago during the housing slump of the Great Recession.