May home prices inch up to new record, sales increase

Home sales picked up in May with a slight inventory improvement and an equally slight shift in sellers’ adjustment to a moderating market and the current mortgage rate.

So far this year, the local market has been one with slow positive change that stands in contrast to some national reports that show a moving to – or already at – pre-pandemic inventory recovery. Some pundits are even firing up price crash rumors. That’s far from what the local metrics show.

Sales are stable, prices are up, the total sales volume for the first five months of the year is nearing the $1 billion market, and the outlook is for more of the same.

Realtors® report they are still seeing multiple offers and cash accounts for about a third of sales. The market sweet spot continues to be in the move-up and luxury markets.

SALES

At mid-month there were 840 home sales, up 9.8% from last year. To get a better feel for how they are behaving compared to previous years, consider this: So far this year, the monthly average is 617 sales. That’s less than the averages every year after 2016.

June would typically be another sales increase month before the market begins seasonal adjustment.

PRICES

May’s median sales price of $272,035 is a record. Prices have been growing at a rate of 4% per month so far this year. Given current conditions and the mood of the market, look for the prices to increase through July. The growth rate should slow with seasonal slowing.

A current risk analysis by ATTOM ranks both Sullivan and Washington counties as very unlikely to see a market decline. At the same time, Moody’s Analytics is forecasting a May 2024 – May 2025 2.9% decline in Johnson City metro home prices and a 5.2% decline in the Kingsport-Bristol metro.

INVENTORY

Buyers had the advantage of the best inventory since 2021 last month, but it’s far from the balanced market conditions that would begin exerting downward pressure on prices.

The region had 1.9 months of inventory in May. It hasn’t seen balanced conditions since late 2019. Inventory is increasing, but much of it – especially the properties that are priced right – are snapped up as soon as they hit the market.

DEMAND

The standard measure of demand is how long a property is on the market before selling. It has decreased every month so far this year but higher than last year. That signals less demand, but it doesn’t carry the same weight as it would in a balanced market.

Price reductions increased in May. They accounted for only 55% of May’s sales. The average was $16,533. Sellers also lowered their original listing price on 34% of the homes that sold in May. That was consistent with the previous month, but below what has been the norm since the first of the year. The average listing price reduction was $32,883.

AFFORDABILITY

Sales in the affordable market accounted for 37% of all sales in May with the most activity in the $180K-$199,999K and $200L-$250K price ranges.

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