The Nashville real estate market experienced its slowest month in more than 15 years in January, as the faltering economy and fallout from the housing bubble continue to hammer sales.
Fewer than 1,000 homes were sold last month — the fewest since February 1993 — according to data released Monday by the Greater Nashville Association of Realtors. The poor performance indicated that low interest rates and a tax credit for first-time homebuyers have failed to goose sales so far.
"I'm not surprised, but I'm a little bit disappointed," said Mike Nichols, the association's president and the managing broker of Zeitlin InTown. "I would have liked them to be higher, but they (buyers) are sitting and waiting to see what will happen."
The median price of a single-family home sold in January also slid, falling 8 percent from a year ago to $165,000. The median price of a condominium, however, rose nearly 4 percent, also to $165,000.
Real estate agents blamed rising unemployment and a worsening economy for sapping consumers' confidence, leaving them disinclined to take on major purchases. They said it would be months before the market turns around and years before it returns to peak sales levels experienced in 2006.
The figures were released as federal lawmakers in Congress debated a new tax credit to jump-start the housing market, after the failure of last summer's $7,500 credit for first-time buyers. The Senate has proposed raising the credit to $15,000 and opening it to all homebuyers, while the House of Representatives has proposed removing a repayment provision to make it more attractive.
The two versions will be reconciled as part of the planned $800 billion stimulus package.
The credit is the latest in a series of moves taken by government officials to aid the ailing housing market. Federal officials have also bought up mortgage-backed securities in a bid to drive down interest rates, which currently stand at about 5.28 percent for a 30-year fixed-rate mortgage.
But with unemployment rising and consumer confidence low, most homeowners have opted to refinance their current homes rather than shop for another, real estate agents and mortgage brokers said.
"People are more concerned about the overall economy," said Richard Courtney, a former GNAR president and a managing broker at Fridrich & Clark. "They're taking a more conservative approach."
Refinance applications riseFigures from the Mortgage Bankers Association appear to support the claim. The association said last week that applications to refinance had climbed 16 percent, while purchase applications had fallen 11 percent.
Dan Crockett, president and chief executive of Franklin American Mortgage Co., estimated that 65 percent to 70 percent of his firm's current business is refinancing.
Some borrowers are holders of adjustable-rate and exotic mortgages looking to lock in a fixed-rate loan. Others are simply people who want to reduce their mortgage payments.
"With the economy being bad, if they can save $300 or $400 a month, they will," Crockett said.
All told, 974 single-family homes, condos, multifamily properties, farms, land parcels and lots closed last month, down 41 percent from January 2008.
Sales dropped about 59 percent from their record for the month: 2,371 closings in January 2006.
The level of sales was the lowest in any month since the GNAR expanded its coverage to a nine-county region in 1996.
Meanwhile, the number of properties on the market climbed 2.5 percent from a year ago to 22,509 listings, but all of the increase was attributable to a rise in the number of farms and undeveloped land for sale. Inventories of single-family homes and condominiums have fallen 3 percent each since last January.
Reduced inventories could help stabilize prices, though, by reducing competition for sales, Nichols said.
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