Nashville Real Estate Market Update [June 2024]

June Market Stats

June Key Takeaways

😳 - Homes are not selling and inventory is starting to climb. The key stat, "Months of Supply" rose to 4.27 months meaning we are no longer in a seller's market.

🏠 - Just 683 homes closed in Davidson County this June – a staggering 18% fewer than in June 2023.

📉 - Average & median sales price figures are misleading as they only account for closed transactions – not the inventory that's been sitting.

🪓 - Price cuts are on the rise nationally. 34.4% of homes on the market have taken a price cut. I don't think prices will plummet (like they are in Austin) but I do think sellers need to be more realistic when listing.

June In-Depth Analysis

Supply-Side:

Like any market, the health of the real estate market is defined by the number of willing buyers (demand) compared to the number of active listings (supply).

Throughout most of 2023, the number of new listings being added to the market each month has been less than in years past (see New Listings chart below).

This is because most homeowners can't justify selling their home and giving up their low mortgage rate (below 4%) when the current rate for a 30-year mortgage is around 7%.

So, fewer new listings are being added to the market each month and homes are not selling as quickly as in 2022 or 2023 so the total inventory (i.e. the number of homes added to the market + the active inventory that has been sitting on the market) continues to rise each month (see Total Inventory chart below).

For example, in June 2022 total inventory was 2,791. Compare that to 3,133 in June 2023 and 3,417 in June 2024. You can clearly see a trend starting to emerge.

Demand-Side:

Now that we know the supply side of the market is starting to rise, let's take a look at how the demand side of the market is performing.

One way to gauge buyer demand is by looking at the number of closings each month (see Closings chart below).

For example, 1,094 homes closed in June 2022 compared to just 835 closings in June 2023 and 646 in June 2024 – another trend starting to emerge.

And, for those thinking that June might have just been a fluke, sadly it was not. If we compare the number of closings in aggregate since the beginning of each year, it looks like we are slightly below 2023's performance (see Closings Aggregate chart below).

So, at this point, we've looked at the supply side of the market and determined how many homes are closing each month. If only there was a stat that could compare the current level of supply in relation to the demand we've seen 🤔.

Luckily for us, there is and it's called the "Months of Supply"! Given the current sales pace, this is a measure of how long it would take for all the current homes on the market to sell if no new homes were added.

As a quick reminder from last month's market update:

• 1 to 3 months of supply: Seller's market (high demand, low inventory)
• 4 to 6 months of supply: Balanced market
• 7+ months of supply: Buyer's market (low demand, high inventory)

In June 2022, months of supply was 1.57 months – a strong seller's market. June 2023 saw months of supply rise to 3 – still a seller's market. In June 2024, months of supply spiked to 4.52 – unusual during a time of the year (summer market) when months of supply is historically very low. It will be interesting to watch if months of supply continues to spike heading into the winter.

Home Prices:

The trend of increased inventory and slowing buyer demand has been playing out over the past year and a half. While I don't expect prices to rise much in the coming 6-12 months, I also don't expect prices will plummet.

Home prices have remained resilient. According to the data, the median home price in Davidson County has actually increased from $490,000 in June 2023 to $525,000 in June 2024.

Keep in mind that this data only incorporates CLOSED SALES! It does not consider the stale, overpriced listings that have been sitting on the market month after month.

On a related note, it's interesting to see the widening gap between the average sales price and median sales price in Davidson County over the past 5 years (see Median and Average Sales Price chart below).

Could this be a sign of the widening wealth gap? After all, Nashville continues to set records whether it be a $15M downtown condo or $4M new construction homes in Green Hills that have seemingly become normal.

Mortgage Rates:

Mortgage rates have been the enemy of buyers AND sellers for just under two years now. Buyers want lower rates in hopes of a lower monthly payment. Sellers want lower rates in hopes it will bring buyers back to the market.

As of June 30th, the average 30-year fixed rate mortgage was 6.92% but has since risen back above 7% in the past week.

It doesn't look like we'll get relief anytime soon. While the Federal Reserve is still anticipating one rate cut this year, it is likely that mortgage rates will remain well above 6% for the next 12-24 months.

Affordability Check-In:

As rates and home prices remain elevated, affordability continues to be at an all-time low. For example, with a 6.92% mortgage, a homebuyer will pay 1.38X the loan amount in interest over the life of the loan – let that sink in for a moment.

To combat high rates, and to compete with the incentives many new construction home builders are offering, some sellers have started offering money that buyers can use towards a rate buydown.

A buydown is a way for a borrower to obtain a lower interest rate by paying discount points at closing. This is a temporary solution that may allow a buyer to have a lower interest rate for a few years with the hope of being able to refinance their 30-year mortgage once interest rates come back down.

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If you have any questions about the state of the market or the home buying/selling process, please feel free to contact us at contact@felixhomes.com or 615-354-5731.