New Construction Trends

New construction home sales in Rutherford County, TN, have decreased by 50% over the past 3 years. To those of us selling real estate in Murfreesboro, this figure is startling but not surprising.  The graph on the right shows the number of homes for sale since April 2008 (light green), homes pended (red line), and homes sold (dark green). 

If the trend of the graph is taken as a whole, then potentially we have not hit bottom yet in all three categories. November 2010 saw the lowest number of pended and closed sales (19 and 20 respectively.) Last month the pending and sales figures did increase, but only to a similar spike seen in September 2010.  And while it is good for sellers of existing homes to have fewer properties on the market, for builders,  the workers they employ, and the local economy, it would be better if more homes were under construction. 

As you might expect, prices have also fallen, but to a much lesser degree.  The highest average price per square foot was $100, which we saw in November 2008 and July 2010.  However, the low came in at $88/sq ft. just two months ago, in January 2011.  Last month it was back up to $95 per square foot, but only time will tell if that was just another spike in a downward trend, or the beginning of a long-awaited turnaround in the market.

March 2011 Trends

March 2011 did see a decline in the number of pendings when compared to the shorter month of February 2011. The chart to the right is for existing homes in Rutherford County, priced between $100,000 and $400,000.

Since pendings were up for February, it would make sense that closings would also show an increase in March, which indeed the graph displays. The good news I would take from these figures, however, is that most of those closings were the result of transactions that took 4 weeks or less.

In other words, your average short sale or HUD foreclosure that pended in February would not be reflected in the March number of closings, since they often take longer than a month to close (if they close at all.) Therefore, the rise in closings for March are more reflective of a recovering economy-- one not dependent upon short sales and foreclosures.

It is also important to keep in mind that the figures for February, March, April, and even May and June 2010, are reflecting the Federal government's tax credit that was a part of the stimulus package. One could reasonably say the chart's rise in pendings and sales during that time period is a false echo since the economy wasn't able to sustain that growth. Any current increase in sales should be more reflective of recovering economic conditions and confidence in stabilizing real estate values.

Next time we'll look at how new construction is faring this first quarter of 2011.

Real Estate Trends since 2008

Comparing the last 3 years of the real estate market in Rutherford County, TN, will reveal we're still battling a tough economy. The following graphs are from Feb. 2008 to Feb. 2011 in Rutherford County (Murfreesboro city), with prices ranging from $100,000 to $400,000.

The first graph shows the market trend for the number of months it took to sell a given listing. It's what we real estate agents call the "Absorption Rate." In other words, if I listed your house today, it would take an average of 13 months to sell. However, if your home went on the market in July of 2008, that sign in your yard would have been there only 6 months, on average. An absorption rate of 6 months is considered an even market--not a buyer's or seller's market. Obviously, a 13 month absorption rate is very much a buyer's market.

The second graph compares the number of homes on the market (light green) to the number of homes sold (dark green), again, over the past 3 years. The good news from this graph is that the total number of homes for sale has declined. That is, our inventory is down which helps to make it a more even market. However, what this doesn't show is the number of sellers who want to/need to sell their home but have given up or are in the long process of foreclosure.

The dark green, or number of homes sold, is not so encouraging. Ideally, the dark green bars would be increasing as the light green bars decline. Instead, this shows the number of homes actually sold is the lowest it's been in 3 years. I will have to say, however, that I think March's statistics will show a definite improvement. There is no doubt that we have had more activity (listings, showings and SALES) in the past few weeks than we've seen in awhile. I'm anxious to check March's trends, so be watching for the next post....