In May 2024, the U.S. housing market experienced a notable slowdown as existing-home sales fell for the second consecutive month. According to the National Association of REALTORS® (NAR), sales decreased by 1.9% both month-over-month and year-over-year, with all four regions of the country showing declines. This trend is primarily driven by higher borrowing costs and accelerating home prices, sidelining some prospective buyers and causing market activity to slump as summer approaches.
Chattanooga Region Market Highlights for May 2024
While the national market faces challenges, the Chattanooga region is showing some contrasting dynamics:
- New Listings: Increased by 25.0%, reaching a total of 1,466 new listings.
- Pending Sales: Rose by 13.1% to 986.
- Inventory Levels: Grew significantly by 28.4% to 2,398 units.
- Median Sales Price: Increased by 7.2% to $344,000.
- Days on Market: Decreased by 17.1% to an average of 29 days.
- Months Supply of Inventory: Rose by 33.3% to 2.8 months.
These figures suggest a more dynamic market in Chattanooga, with rising inventory and strong buyer interest.
National Trends: Rising Prices and Inventory
Across the country, home prices continued to climb in May 2024 despite an uptick in inventory. The median existing-home price nationwide reached $407,600, marking a 5.7% increase from the same period last year and setting a record high for the month. Inventory levels also rose, with total inventory heading into May at 1.21 million units, reflecting a 9% month-over-month increase and a 16.3% year-over-year increase. This translates to a 3.5 months’ supply at the current sales pace.
Factors Influencing the Market
Several key factors are contributing to the current market dynamics:
- Higher Borrowing Costs: Rising interest rates are making mortgages more expensive, deterring some potential buyers from entering the market.
- Accelerating Home Prices: The continual increase in home prices is putting additional financial strain on buyers, further dampening demand.
- Increased Inventory: While more homes are becoming available, the high prices and borrowing costs are preventing a significant number of these homes from being sold quickly.
Buyers and Sellers: Navigating the Market
For buyers, the current market presents both challenges and opportunities. The increased inventory means more options to choose from, but the higher prices and borrowing costs necessitate careful financial planning. On the other hand, sellers are finding that homes are selling relatively quickly, with a national median of just 29 days on the market.
Looking Ahead
As we move further into the summer, market participants will be closely watching for any shifts in these trends. Will the increase in inventory start to exert downward pressure on prices? Will borrowing costs stabilize, making homes more affordable again? Only time will tell.
In summary, while the national housing market experienced a slowdown in sales amid rising costs and prices in May 2024, regions like Chattanooga showed robust activity with increasing listings and sales. Both buyers and sellers must stay informed and adaptable in this evolving market landscape.