Real estate businesses are hoping a tax credit for first-time homebuyers will re-energize the housing market as the slump in Nashville-area housing sales and average prices continued in July.
Home sales were 26 percent below the level of a year ago, and the median price of a single-family home sold in Middle Tennessee fell for the second consecutive month, according to data released Monday by the Greater Nashville Association of Realtors.
The figures are the latest indication that a turnaround remains far from sight two years after sales began to decline across the region and the country.
The market probably will continue to be slow for at least a few more months, the heads of the GNAR and the Home Builders Association of Middle Tennessee said.
Both organizations expect a $7,500 tax credit, passed by the U.S. Congress and signed by President Bush last month, to eventually stimulate sales. The credit is available to people who buy their first homes between now and next summer.
"I don't think we'll see any major recovery … until early next year," said Mandy Wachtler, the GNAR's president. "It'll take a few months for it to shake out and for first-time buyers to know it's available. Then, they've got to locate a property, and they've got to qualify."
July sales data for the Middle Tennessee housing market were essentially in line with recent months.
A total of 2,488 single-family homes, condos, multifamily units, farms and lots were sold, down from 3,349 properties in July 2007.
July marked the 11th straight month that sales were down at least 25 percent from a year ago.
The median price for a single-family home sold during the month was $179,995, down 5 percent from July 2007. It was the second month in a row the median for a single-family home has declined.
Inventory increasesThe cause was likely higher inventory, which rose slightly to 25,023 residential properties over the course of the month. At the current rate of sales, it would take about 10 months to sell all the homes on the market in Middle Tennessee, about four months longer than is considered healthy.
The slowdown has caused homebuilders to cut back sharply on construction, which is having an effect on land investors.
While the number of single-family homes on the market has begun to level off, the number of undeveloped lots and farmland is still rising as homebuilders hold off on buying more land for development.
"I think we're at a point where everyone that's left (in the homebuilding industry) is in a holding pattern," said Michael Arnold, the Home Builders Association's president.
Arnold doubted that land purchases and homebuilding activity would pick up again this year, unless buyers embrace the tax credit.
"You've got a lot of people sitting on the fence, and $7,500 can push people off the fence," he said.
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