MTSU’s housing report shows drop in construction permits from last year
NASHVILLE, Tenn. (WKRN) — Middle Tennessee State University’s (MTSU) second quarter housing report is out, and real estate in the Greater Nashville area is showing mixed results.
Each quarter, the Business and Economic Research Center (BERC) at MTSU tracks real estate with a close eye. Dr. Murat Arik discussed his takeaways from the newly-released report with News 2.
“What you have here is a kind of standstill in housing market,” said Arik, the director of the BERC at MTSU.
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From home sales, to inventory and permits, Arik said he is seeing mixed signals.
For example, with regard to construction permits, MTSU’s report found that from quarter 1 to quarter 2, single-family permits were up quite a bit — more specifically, 20.6%. However, when compared with the previous year, permits were down.
“It’s hard to read how things are in the market right now,” Arik told News 2.
“If there’s a signal that interest rates [are] going to go down, you may see more applications for permits, but if there’s a signal that the tightening may continue or maybe additional 25 basis point increase interest rate, then…you may see the slow down,” he added.
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According to Arik, inflation also affects builders, which leads to more expensive homes. His data analyzed housing in 13 Middle Tennessee counties.
“Think about the fact that the builders [are] also constrained by the higher interest rate,” he explained. “They cannot simply go to the shopping spree to build homes. They also have to also carefully assess their own unique situation.”
In the new report, closings are showing mixed results, as well. From quarter to quarter, the change was not all that significant, decreasing just a bit, but year over year, closings declined by 20%.
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As 2023 closes out and another interest rate hike looks more likely, adding even more to a monthly payment, Arik offered this advice for builders: “If you are a builder, your best option [is] probably to build affordable units…Currently, in the market, anything under $400,000 could go very fast.”
Arik said we could see the mortgage industry and builders come up with new, creative mortgage products in the next year to help with affordability.
To read MTSU’s latest “Housing Tennessee” report, follow this link. The next report is set to be released in December.
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