Last month, the Federal Reserve put a pause to interest rate hikes, ending a 15 month streak. This pause brings a bit of relief to potential homebuyers, as it may signal an end to increasing interest rates. However, this pause does not mean interest rates may not rise a few more times this year. The Federal Reserve began interest rate hikes in March of 2022 in an effort to combat inflation. Current 30-year fixed rate mortgages have a national average of 7.25% according to Bank Rate. This is a long way from the 2 – 3% interest rates we saw during the COVID-19 pandemic. As the battle to combat inflation continues, it may be a while before we see interest rates start to trend downward again.
The Tri-Cities real estate market has experienced change, but signs are beginning to point toward a more balanced market. Northeast Tennessee Association of Realtors reports the Move-Up and Luxury markets are beginning to balance, while the affordable market is still experiencing inventory woes. Overall inventory for June was at 1.9 months of inventory, still lower than our balance, or normal, inventory of around 4 months. While Tri-Cities home buyers struggle with inventory, home prices have also become a concern. Home prices in our region have continued an upward trend with the average home sales price being $312,000, over $26,000 higher than the prior month and over $33,000 higher than June of last year. Most of the Tri-Cities region has experienced median sales price increases, and the highest median sales price in our area is currently in Piney Flats, TN with a June Median Sales price of $423,000. Our region has even been recognized nationally for largest percent gain in existing home prices. Other interests to note are that Days on Market, the amount of time a home is on market before closing, has increased slightly year over year to its current 51 days, a week longer than June 2022. Another signal to lowered demand and a balancing market is the average difference in list and sale price. NETAR reports the average discount for sales in June was $10,000, and discounted sales made up over half of all home sales for June in our region.
Regardless of interest rate and increased home prices there is still demand for housing. Homebuyers are finding the benefits of homeownership outweigh trying to wait out the market and continuing to rent, and that refinancing is an option later down the line. Home Sellers are cashing in on increased equity to make moves into the Move-up and Luxury markets.
If homeownership or home equity are on your mind and you have questions, please reach out to any of our licensed REALTORS®.