Sales of homes tumbled by nearly half last month, as a weaker economy led "fearful" buyers to drop out of the real estate market in droves and the median home price here fell 8 percent compared with a year ago.
"It reflects a deteriorating economy," said Alexander Miron, an assistant economist with Moody's Economy.com, which tracks the Nashville area.
Residential property sales fell
45 percent compared with November 2007, making last month the worst November since 1992, according to data released Tuesday by the Greater Nashville Association of Realtors.
Economists and other analysts said the slow pace of sales probably resulted from a deepened sense of pessimism among consumers, as the state's unemployment rate rose and the stock market plummeted throughout the fall.
"Finally the national conscience — it's like a cancer — has permeated into our market," said Mandy Wachtler, the GNAR's president. "People are fearful."
The sharp drop came after sales had fallen more than 20 percent for the past several months from their peak levels three years ago. In the end, 1,243 residential properties — single-family homes, condos, multifamily buildings, farms and lots — were sold last month, down from nearly 3,000 that changed hands in November 2005.
The GNAR also reported that 1,267 sales were pending at the end of November, down 35 percent from a year ago.
Sales pick up elsewhereThe decline locally comes even though sales in parts of the country are rising.
The National Association of Realtors reported Tuesday that its index of pending home sales fell in October but rose in many local markets in California and Florida — two states that have been severely hurt by the bursting of the housing bubble. The group said pending sales were also up in Las Vegas, another hard-hit market.
Meanwhile, the Mortgage Bankers Association said applications for home purchase loans rose 37 percent nationally during the last week of November, as more buyers try to take advantage of mortgage rates that have fallen below 6 percent.
"There's been significant traffic in the past week and a half," said Jim McCann, the head of mortgage lending at Avenue Bank in Nashville.
Still, the mounting pile of poor economic news this fall seems to have sent a chill through real estate nationwide, said Jay McCanless, a Nashville-based housing analyst with FTN Midwest.
"We did see in homebuilding that all the negative coverage caused traffic to slow down," he said.
Sales may not come out of their torpor without outside stimulus, some observers said.
A $7,500 tax credit created for first-time homebuyers appears to be drawing few people into the market, Wachtler said. Realtors are now lobbying Congress to give direct aid to homebuyers, either through down-payment assistance or lower interest rates.
"If you don't have any money to put down to buy a house, it's not really going to help you to get a tax credit in April," Wachtler said.
More price reductions also might boost sales. In some parts of the country, prices have fallen 30 percent in the last year, but Nashville's prices have fallen far less sharply.
The median price of a single-family home dropped to $165,000, down 8 percent from a record for the month of November set one year ago. The median price of a condo fell to $150,000, down 10 percent.
Builders may also need some assistance, said Edsel Charles, president of MarketGraphics, a Franklin firm that tracks the homebuilding industry. Many are being squeezed by tightened lending requirements from regulators.
"I think there's a tremendous amount of skepticism around the country, and we felt that in Nashville, as well," he said.
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