Last week, the Federal Reserve met, and Chair Jerome Powell set the stage for the central bank’s first rate cut in four years, citing greater progress toward lower inflation while keeping the key interest rate unchanged.
A rate cut by the Fed won’t likely have an immediate impact, but over time, lower Fed rates should reduce borrowing costs for consumers, including mortgages.
For the housing market, if the Federal Reserve does cut rates combined with the continued softening of interest rates, we could see strong housing sales through the third quarter of 2024.
In Greater Nashville, we’re already seeing signs of recovery emerge based on the latest home sale data released this week for July.
After sluggish activity in June, the Middle Tennessee housing market posted a strong rebound with an increase in nearly all categories.
With 3,166 home closings for the month, we saw a 5% increase from the 3,001 closings reported for the same period last year. What’s even more promising is the continued interest in condo sales across the region, which boasted a 27% increase compared to last year. This increase is largely due to several newly constructed developments that have begun to deliver to buyers in Nashville market.
Home sale prices also reflect this positive trend. The median price for a residential single-family home in July was $506,750, up from $478,945 last year. Condominium prices also saw an increase, with the median price rising to $359,900 from $350,110 in July 2023. These rising prices indicate a strong demand and a robust market.
Inventory at the end of July was 11,844, marking a 20% increase from the 9,892 active listings reported for the same period last year. This growth in available homes can help meet the increasing demand and potentially stabilize prices. However, the reductions in interest rates in early August also have the potential to further drive market demand, setting the stage for a more competitive environment which could continue to drive pricing higher. Regardless, the current 4 months of available inventory in the Greater Nashville region is the highest level of overall inventory that we have experienced since 2019. More inventory means more options, and more options are always better for consumers.
Pending home sales were down coming out of July. But don’t necessarily expect it to follow that closings will be down in August. Pending home sales were down in June and the region finished the month at +5%. With new construction condos continuing to close combined with lower mortgage rates.
