MTSU BERC report: State housing market mixed in Q2, with prices up, permits down

Tennessee's housing market for the second quarter of the year remained relatively stable, with upticks in prices and inventories amid drops in permits and closings, according to the latest statewide report from Middle Tennessee State University.

Murat Arik, director of the MTSU Business and Economic Research Center in the Jones College of Business and author of its statewide report, noted the second quarter housing market, amid a stable labor force and low unemployment, showed mortgage delinquencies and foreclosure rates "remained largely stable over the quarter and past year, underscoring the overall resilience of Tennessee's housing market."

• Across Tennessee, home prices edged up 0.7% quarterly - slightly above the U.S. gain of 0.5% - while home values climbed 3.7% year-over-year as national prices grew 3.9%.

• Closings diverged in the large metro areas - down in Nashville (-4% quarterly, -2.3% annually); flat in Memphis quarterly but down annually (-6.2%); and rising slightly in Knoxville (+0.6%) but down slightly (-0.9%) annually.

• Inventories in those metros climbed 7% to 8% quarterly and between 21% and 40% over the year.

Construction permits drop statewide

• Single-family housing permits declined across all regions quarterly. Tennessee reported a decrease of 2%, while the South and the U.S. experienced larger declines of roughly 5%.

Annual results mirrored that quarterly weakness, with declines of 4.5% in Tennessee, 8% in the South, and 7% nationwide.

• Multifamily permits were more mixed quarterly, with the state recording a sharp decline of 36.4%, compared with a marginal decrease of 0.3% in the South. Nationally, however, multifamily permits increased by 6%, diverging from state and regional trends.

Annually, Tennessee's permits dropped by 21.6% year-over-year, while the South registered a modest increase of 3%. At the national level, multifamily permits rose significantly by 9.8%.

• Overall, total permits in Tennessee declined by 7.5% year-over-year, compared with a 5.4% decline in the South and a smaller 1.8% decrease nationwide.

See the full report and more detailed breakdowns, including employment data, at https://www.mtsu.edu/berc/housing/ .

Home price trends

Quarterly trends on home prices include:

• Strong growth areas: The Morristown MSA posted the strongest growth, with home prices rising 3%. Johnson City followed with an increase of 2.7%, while Clarksville also recorded solid gains of 2.1% during the quarter.

• Moderate growth areas (less than 1.5% gains): The Chattanooga MSA recorded an increase of 1.2%, while the Jackson MSA rose by 0.6% over the same period.

• Mixed, slower growth areas (less than 0.5% gains): The Memphis and Nashville MSAs saw only slight increases of 0.48%, while Knoxville posted a minimal rise of just 0.08%.

• Declining areas: The Kingsport-Bristol MSA posted a modest decrease of 0.27%, while the Cleveland MSA experienced a sharper drop of 0.8%.

Year over year, Morristown led all Tennessee markets with a 5.24% surge in home prices. Johnson City followed with an increase of 4.6%, while Clarksville posted a gain of 4%, rounding out the top three markets for annual growth.

BERC's report is funded by the Tennessee Housing Development Agency, or THDA. The quarterly report offers an overview of the state's economy as it relates to the housing market and includes data on employment, housing construction, rental vacancy rates, real estate transactions and mortgages, home sales and prices, delinquencies and foreclosures.

The Business and Economic Research Center operates under the Jennings A. Jones College of Business at MTSU. For more information, visit http://mtsu.edu/berc/ .

About THDA

THDA is the state's housing finance agency committed to expanding safe, sound, affordable housing opportunities for low- and moderate-income Tennesseans. This is achieved through a robust home loan program, competitive funding for local nonprofit and municipal agencies, and the administration of nine federally funded programs.

THDA publishes research on affordable housing, THDA programs, and beneficiaries. THDA also coordinates state planning for housing through the Consolidated Planning process, annual Action Plans, and annual Performance Reports. See http://thda.org for more information.