Tennessee’s home-buying market remained active in the second quarter of 2014, even as total home sales decreased by 3.63 percent compared to the same period in 2013 (from 18,052 to 17,396), and the median price rose by 5.53 percent (from $161,000 to $169,900), the Tennessee Association of Realotrs noted.
At the same time, the number of homes available for purchase declined from 39,624 in June 2013 to 29,335 in June 2014—a difference of 18.4 percent in inventory.
Meanwhile, condominium sales statewide rose by 3.2 percent (from 1,583 to 1,634) as inventory declined by 25.8 percent (from 3,514 in June 2013 to 2,609 a year later). The median condo price rose 5.24% over the year-earlier quarter (from $145,000 to $152,599).
“These results for the second quarter show that Tennessee’s home-buying market remains strong, even with adjustments in sales, median price and inventory since the same period a year ago,” said Neal Clayton, 2014 TAR president. “Our state’s economy remains on the upswing overall. A business-friendly climate, excellent educational options, and a continuing high quality of life are among the many good signs for buyers and sellers throughout the state.”
In Tennessee as in other areas of the U.S., some prospective buyers who have above-average credit scores but low down payments are deterred from homeownership by the high cost of FHA mortgage insurance.
“Access to affordable credit continues to hamper young, prospective first-time buyers,” said Steve Brown, president of the National Association of Realtors. “We recommend that FHA reduce high annual mortgage-insurance premiums for all qualified homebuyers and eliminate the insurance requirement for the life of the loan. FHA’s HAWK program is a good start, but it should offer further reductions for participating home buyers.”
In addition, stagnant wage growth in many parts of the nation is holding back what could be a stronger pace of U.S. home sales.
“Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month,” said Lawrence Yun, NAR chief economist. “However, the lack of wage increases is leaving a large pool of potential homebuyers on the sidelines who otherwise would be taking advantage of low interest rates. Income growth below price appreciation will hurt affordability.”