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October 2024 Market Pulse Newsletter

Market Pulse is a monthly research newsletter providing a rundown of the latest housing and economic research and analysis across East Tennessee.

Home Sales Report

September 2024

  • East Tennessee home sales decreased 7.8% from the previous month, and decreased 1.0% from a year ago.
  • The median sale price was $371,250 — up 9.19% from the previous year.
  • Total housing inventory increased from the previous year – up 38.3% from a year ago.
  • Half of the homes sold were under contract in 20 days or less, up from 11 days a year ago.
  • 40.55% of homes sold for the asking price or above, with 18.77% selling for more than the asking price. 8.04% sold for at least $10,000 over asking and 2.88% sold for at least $25,000 over asking price.
  • The sale-to-list price ratio decreased from last month to 97.5% – down from 97.9% a year ago.
  • New construction represented 12.36% of total home sales.

East Tennessee REALTORS® reports home sales data using a seasonally adjusted annualized rate (SAAR), a statistical measure of home sales that takes into account typical seasonal fluctuations in the real estate market, such as increased home sales during the spring and summer months, by adjusting the data to provide an annualized rate. This rate represents the projected number of homes that would be sold over a year if the current sales pace were to continue.

What's the Outlook? After beginning to recover in July and August, home sales throughout the East Tennessee region decreased again in September. Mortgage rates remained below 7% for the entirety of September, for the fourth month in a row. However, rates did gradually rise from the recent low of 6.08%. The inventory was 38.3% higher than this time last year and is increasing month over month, however new listings decreased in September. There was a 3.2% increase in active listings from August to September, slightly lower than the June to July increase. The median sale price increased month over month breaking the trend of decreasing median sale price the past two months.

Knox County saw home sales increase 3.0% from the previous year and decrease 9.0% over the previous month. The data shows a 43.5% increase in inventory over this time last year and a 1.9% increase month over month.
We are seeing housing inventory continuing to increase in October by 3% month over month. Most counties in the East Tennessee REALTORS® footprint saw an increase in listings with Campbell, Monroe, and Morgan counties experiencing the largest monthly increase in inventory. Union experienced the largest decrease in their monthly inventory in October. However Cumberland, Fentress, Roane, and Scott also saw decreases in inventory.

 

Rental Market Continues to Moderate in Q3 2024

The rental market continued to moderate in Q3 2024 thanks in part to the increase in units available. 1,815 units were completed in the year ending with Q3 2024 with 1,447 expected to be completed in the next four quarters. These new units brought online in the past year increased the overall inventory by 3.4%, however by Q3 2025 we anticipate demand to outpace supply by over 550 units. With this increase in units over the past year we have seen the occupancy rate moderate at 95.8%, down from the high of 98.9% in 2022. However, due to the anticipated gap in necessary units we anticipate the occupancy rate will increase slightly in the future.
The annual effective rent change in Knoxville has continued to decrease each quarter since Q1 2023. In Q3 2024 the annual change in effective rent change decreased over 1% compared to the prior quarter with only a 1.3% increase. The average rent slightly increased in Q3 to $1,512. This is only a $30 increase over Q2 2024 and continues to show a decrease in rent growth in the Knoxville area. The United States as a whole and the south region have both moderated much quicker than the Knoxville Metro Area, however all three have been moderating since 2023. Knoxville is still above the national average of only 0.3% annual effective rent change. We expect this trend to continue as occupancy rates decrease and supply increases.
Interestingly, although we continue to see a need for greater supply in the area moving forward, there was a slight outpacing of supply over demand in Q3 2024. Although we are currently seeing this trend, we anticipate within the next year we will see demand once again outpace supply which could negatively impact the moderation in the rental market.

 

New Construction Insights

Commercial Real Estate Insights as of Q2 2024
Across the country we are seeing office space sit empty and a negative net absorption rate, however in Knoxville the demand for office space is stronger as the area has a much higher absorption rate than most of the country. Although rent is higher in our area, the rent growth over the past year has decreased from 5.5% to 2.5%. Vacancy rates on the other hand have decreased from 4.1% to 3.2%.

This trend continues for multifamily, retail, and industrial spaces across our area. When compared to the other metro areas in Tennessee, Knoxville has substantially lower vacancy rates than any other metro area.
Overall, Knoxville is showing a stronger demand than most other metropolitan areas in Tennessee and across the country. Compared to the record high vacancy rates on a national level we continue to have comparably low rates and continue to see growth in this sector of real estate in our area.

 

Read the Full Report Here

"Moderating home price increases are welcome news for home buyers. With wage growth now outpacing home price appreciation, housing affordability will improve."

– Lawrence Yun, Chief Economist at NAR

IN THE NEWS

Stay up-to-date with the most recent information about East Tennessee's housing market. Here's the latest from local media:

WATE: US home sales slowed again in September, falling to weakest annual pace in nearly 14 years

Newsweek: US Job Seekers Are Moving To These 5 States

WBIR: Rising TN population could affect housing prices, experts say

Mortgage Rates Remain Below 7%

Mortgage rates remained below 7% through all of October, however they gradually increased from the two year low in September. According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed mortgage rate (30Y FRM) averaged 6.54% for the week ending October 24, 2024, compared to an average of 7.79% this time last year.
What's the Outlook? According to NAR Deputy Chief Economist the rate grew this past week. At 6.54%, with 20% down, a monthly mortgage payment is $2,031 on a home with a price of $400,000. With 10% down, the typical payment would be $2,285.Mortgage applications are higher than one year ago. The monthly savings a home buyer could have on a $400,000 home is $270 compared to last year. "Housing affordability constraints have dropped the first-time buyer share for two consecutive months to the lowest historic share of 26%." Overall, as expected we continue to see mortgage rates sit below 7%, but do not expect to see meaningful decreases anytime soon.

WHAT WE'RE READING
 

How Gen Z Buyers Are Succeeding in the Housing Market

REALTOR® Magazine| October 17, 2024
Mortgage rates were supposed to come down. Instead, they're rising. Here's why

NPR| October 18, 2024
84% of Outstanding Mortgage Debt has a Sub-6% Rate

Realtor.com | October 2, 2024
Q3 2024 Preliminary Trend Announcement

Moody's | October 1, 2024
10 MAJOR HOUSING STORIES FROM THE LATEST ACS DATA

Joint Center for Housing Studies of Harvard University | October 15, 2024

For questions about the newsletter or its contents, please contact Catrin Latham at catrin@etnrealtors.com.

Data Attribution: You are welcome to use or reproduce this survey data for your own purposes, but we ask that you attribute any full or partial use of the data to East Tennessee REALTORS®.

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