Nashville home prices soaring as temperatures rise

Sandy Mazza | The Tennessean

Nashville's smoldering real estate market is getting even hotter this summer.

Summertime is typically the most expensive season to purchase homes, and this year is no exception.

Buyers paid an average of $320,000 for a house in June, according to a RE/MAX analysis of Multiple Listing Service data. That price is $15,000 more than the average listed sale in May 2018 and $20,000 more than the average in June 2017.

Sales also jumped from 3,130 homes in June compared to 2,904 in May, according to the RE/MAX analysis.

Prices are higher in the summer because it is the preferred time to move for families, said Frank Nothaft, chief economist of CoreLogic, which specializes in real-estate data analysis.

"That reflects when families prefer to move outside the academic school year," Nothaft said. "Homes that tend to sell during late spring and summer tend to be a bit larger with more amenities."

Nashville's neighborhoods are changing as new owners move in Nashville's neighborhoods are changing as new owners move in

The tight housing supply also pushed up prices. The greater Nashville region had a supply of 1.6 months in June — meaning that the housing supply would completely dry up in less than two months if nothing new was put on the market. A supply of six months is considered healthy.

A CoreLogic analysis found that Nashville home prices increased 7.5 percent compared to 7.1 percent nationally, from May 2017 to May 2018.

"The inventory of homes listed on the market for sale continues to be relatively lean," Nothaft said. "The Nashville economy is doing relatively well, and that's supporting demand. Millennials are looking to transition into first-time home ownership, with the unemployment rate having come down sharply. They're feeling much more financially secure."

But housing costs are increasingly unaffordable for many young families, as prices continue to outpace wages.

Rising mortgage rates, which have increased a percentage point since last year, are ballooning the cost of monthly mortgage rates.

Nothaft said he expects mortgage rates to continue to rise into 2019.

"While mortgage rates are still relatively low, their increase translates to a 15 to 20 percent cost in monthly mortgage payments (over last year)," Nothaft said. "Typical wages are generally not rising 15 to 20 percent. That's where the unaffordability pinch takes a bigger bite. The local labor market is doing well and wages are beginning to rise. But not that quickly."

Reporter Sandy Mazza can be reached at 615-726-5962 or by email at smazza@tennessean.com. Follow her on Twitter @SandyMazza.​​