mortgage interest rates Archives

Knox County Housing Market Snapshot | July 2024

HOW ‘BOUT THOSE INTEREST RATES?!

Over the past month or so, we experienced a slow and steady decline in mortgage interest rates, but nothing substantial. That changed when the higher-than-expected unemployment numbers came out on Friday, August 2nd, sending rates on a sharper downward trajectory.

Also, there is growing sentiment that the Federal Reserve will lower the fed funds rate by 50 basis points in September. While this drop won’t have a direct impact on mortgage rates, the effect should continue to put downward pressure on rates.

Median home prices in the Greater Knoxville area remain higher than last year, despite a growing supply of homes on the market. The number of active listings in Knox County is at its highest point since late 2020.

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Knox County Housing Market Snapshot | May 2024

WHERE ARE HOME PRICES GOING?

While average and median home prices in the Knoxville area are still slightly above what they were at this time last year, will this continue or will they begin to drop as housing inventory rises?

Despite interest rates dropping over the past few weeks, they still aren’t low enough to drastically improve home buyer demand. That said, most credible mortgage experts and economists still predict interest rates to be on a downward trend by the end of this year. Lower interest rates mean more home buyers.

The continued upward trend in the cost of living in Knoxville looks like it’s starting to significantly impact people in our area. Per capita income hasn’t kept up with the rise in prices in many cases, leaving many people with less disposable income and likely contributing to the rapid increase in overall consumer debt (ex. personal loans, credit cards). As a result, it’s highly likely that we will see more people having to sell their homes to access the equity they have accumulated in their homes over the past few years in order to keep up with living expenses.

On the flip side, Knoxville’s unemployment rate remains extremely low. There also continues to be a steady flow of new higher-paying jobs from companies moving into the Knoxville area. These are two major reasons why we continue to see home price appreciation in our area.

If home price growth remains flat, interest rates drop into the low 6%/high 5% range, and the unemployment rate stays low, we should expect to see a healthy local housing market heading into 2025.

Knoxville Housing Market Snapshot | November 2023

INTEREST RATES ARE COMING DOWN…

As predicted mortgage interest rates have begun a fairly steady decline since late October when they hovered around 8.25%. This favorable trend is expected to continue into 2024. In fact, both Fannie Mae and the Mortgage Bankers Association predict interest rates will continue dropping well into 2025. This is an optimal trend for a mortgage interest rate buydown if you want to buy a home right now (you can contact Debbie Windisch at Union Home Mortgage for details).

The average home sales price in Knoxville is still up just under 10% compared to this time last year. A limited housing inventory, a low unemployment rate, and many new higher-paying jobs coming to the area are all having a major impact on local home prices.

The outlook for 2024 is still positive for the Knoxville housing market. There are no signs of any significant home price depreciation coming. However, housing inventory is expected to rise throughout the year, so those selling their homes should expect a longer time on the market and far fewer multiple-offer scenarios for homes listed at or near market value.

Knoxville Housing Market Snapshot | October 2023

EYES ARE ON INTEREST RATES

After weeks of consistent increases, mortgage rates dropped below 8% after news that the Federal Reserve did not raise the “fed funds rate”. This is welcomed news for the housing market. Most experts and leaders in the mortgage industry are still predicting declining interest rates in 2024. However, the timing of this trend is still unclear.

As for home prices, there is no decline/depreciation in sight, especially for Knoxville. The average home sales price in Knoxville was up almost 10% last month compared with October 2022. Despite decreasing demand (buyers in the market) due to higher interest rates, the overall supply of available homes remains extremely low.

However, there are indications that home prices should stabilize as we head into the new year. The Knoxville housing inventory has been increasing steadily since the late summer.

The home absorption rate (number of months it will take to buy up the current number of homes on the market) is the highest it has been in the past 12 months at 1.61 months. That said, this number still reflects a strong seller’s market, but the upward absorption rate trend indicates that we’re moving towards a more balanced market. For some perspective, most economists consider an absorption rate of 4 to 6 months to be a balanced market and anything over 6 months to be a strong buyer’s market. We’re still VERY FAR from either of those scenarios.

If you’re interested in what the real estate market is like in your area, check out our local market reports.