In real estate, we hear and often repeat the familiar phrase, “Location is everything.” We all eat, live, and think locally. As a Realtor, I tend to focus on our immediate area. However, to get some perspective, I believe that from time to time we need to step back and take a look at housing from a national perspective.
The National Association of Realtors (NAR) reported Wednesday that existing-home sales—which includes completed transactions for single-family homes, townhomes, condos, and co-ops—rose 3.6 percent in December compared to the previous month.
Nationally, existing-home sales ended 2019 with an increase in December, as a selling market remained strong and housing shortages continued at the start of 2020. Sales are up nearly 11 percent from a year ago.
Lawrence Yun, NAR’s chief economist, expects home buyer demand to remain strong in the new year. “We saw [2019] come to a close with the economy churning out 2.3 million jobs, mortgage rates below 4 percent, and housing starts ramp up to 1.6 million on an annual basis,” Mr. Yun says. “If these factors are sustained in 2020, we will see a notable pick up in home sales in 2020.”
“Home sellers are positioned well, but prospective buyers aren’t as fortunate,” Mr. Yun continued. “Low inventory remains a problem, with first-time buyers affected most.” Here’s a closer look at other key indicators from NAR’s latest national home sales report:
Home prices: Existing-home prices for all housing types was $274,500 in December, up 7.8 percent compared to a year ago. “Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” said Mr. Yun. “The hope is for price appreciation to slow in line with wage growth, which is about 3 percent.”
Inventories: Unsold inventory is at a 3-month supply at the current sales pace. Unsold inventory has dropped for seven consecutive months annually. At the end of December, total housing inventory was at 1.4 million units, down 8.5 percent from a year ago.
Days on the market: Forty-three percent of homes sold in December 2019 were on the market for less than a month. On average, properties remained on the market for 41 days in December, down from 46 days a year ago.
First-time buyers: First-time buyers comprised 31 percent of sales in December, down slightly from 32 percent a year ago.
Investors: Individual investors and second-home buyers accounted for 17 percent of sales in December, up from 15 percent a year ago. Investors make up the biggest bulk of cash sales, which comprised 20 percent of transactions in December.
Distressed sales: Foreclosures and short sales represented just 2 percent of sales in December, unchanged from a year ago.
So what does all this data mean for us locally? This data shows that as other markets experience appreciation and gains, Chattanooga continues to have notoriety for our job growth and affordability. Our housing market looks to remain strong and in some cases perform better than similar major metro markets.