Nashville home inventory hits a record high
Prices hold steady despite decline in sales
Nashville's real estate market is beginning the new selling season the same way it ended the last one — with sales down sharply, inventories building but prices holding steady.
The number of single-family homes, condos and other residential properties on the market topped 25,000 for the first time last month, driven by weak sales and a surge of farms and vacant lot listings.
But unlike in housing markets in the Northeast, the West and Florida, rising inventory and slowing sales did not translate into lower prices, data released Monday by the Greater Nashville Association of Realtors show.
The median price for a single-family home sold in May was $189,975, up 2.5 percent from a year ago. The median price of a condo, meanwhile, was $159,000, down about eight-tenths of one percent.
Prices have remained steady in Middle Tennessee — even as they have collapsed in other parts of the country — mainly because they did not become as inflated during the housing boom as in other parts of the country, economists say.
Still, with the supply of homes growing faster than demand, many observers have begun to question whether the trend can continue.
"I don't know how to explain that," said Mandy Wachtler, president of the Greater Nashville Association of Realtors. "Prices are still staying strong."
Inventory has been building in the nine-county Nashville housing market for about two years, rising from 15,400 residential properties on the market in May 2005 to 25,096 at the end of last month.
Asking prices drop
Rising inventory and slow sales have prompted many homeowners in Middle Tennessee to cut their asking prices, real estate agents and other observers say.
But data collected this spring by the local Realtors association and other researchers suggest that few homeowners have cut so low as to take a loss on their properties.
"I don't want to deal with somebody who wants to steal it," said Vern Fross, a Brentwood resident who sold two homes in Williamson County last month. "I think they got a deal, and I got a fair price. A year ago, I think I would have gotten more, but I got a fair price."
In other parts of the country, bargain hunting appears to be in full swing, said Lawrence Yun, chief economist for the National Association of Realtors.
As the local association released data on the Nashville market, the national group on Monday put out its latest index of pending sales of existing homes across the United States.
That index rose to 88.2 in April, up from a record-low reading in March of 83.0.
The latest reading indicates that sales may have bottomed out nationwide in April, said Mark Zandi, chief economist for the research firm Moody's Economy.com.
"It's the beginning of the end of the housing downturn, but it will be a long painful ending," he said.
In Nashville, pending sales were down 28 percent to 2,489 deals at the end of May, according to the Greater National Association of Realtors.
Land deals are slow
The slowest part of the Nashville housing market is land deals.
Only 95 farms, vacant lots and other undeveloped properties were sold in May, the third-lowest reading for any month since the Nashville Realtors group began publishing data on deals by category in 2000.
Half as many land deals were completed in the first five months of 2008 as in the same period a year ago.
The slowdown in land sales has pushed inventory up 56 percent over the past year, to more than 6,200 properties on the market at the end of May. By comparison, the inventory of single-family homes and condos is up only 11 percent from May 2007.
The relatively slow growth of single-family and condo inventories might explain why prices for those properties have remained steady, Wachtler said.
But prices can't keep rising indefinitely, says Moody's Economy.com. The firm projects that the median single-family home price in Nashville will dip 4 percent by the end of this year before beginning to rise again next year.
