Tennessee, housing, market, Tennessee housing, Tennessee housing market, housing market, construction, first quarter, 1st quarter, 2011, foreclosures, Nashville, Knoxville, Memphis, mortgage, delinquencies, housing prices, MSA, MSAs, Chattanooga, Clarksville, Johnson City, Cleveland, Jackson, Kingsport, Bristol, Morristown

David A. Penn

English

Research Papers in Economics

1
Table 1. Selected Tennessee employment indicators (thousands, seasonally adjusted)
Employment by industry (nonfarm) 2009.4 2010.1 2010.2  2010.3  2010.4 2011.1
Total nonfarm 2,595 2,596 2,616 2,616 2,621 2,630
Goods-producing sectors 404 400 406 404 403 405
Manufacturing 299 297 300   298 296 296
Services-providing sectors 2,191 2,197 2,210 2,212 2,219 2,225
Labor force 3,039 3,057 3,057 3,051 3,060 3,088
Total employment 2,720 2,741 2,758 2,763 2,773 2,795
Unemployed 320 315 299 288 287 293
Unemployment rate  10.5% 10.3% 9.8% 9.4% 9.4% 9.5%
Source: Bureau of Labor Statistics
T
his quarterly series is supported by a  
Tennessee Housing Development Agency grant.
Economic Overview 
First-quarter job growth picked up somewhat in Tennessee with
nonfarm  employment  gaining  9,000  jobs  compared  with  a
revised 5,000-job gain in the previous quarter (Table 1). The
base of job growth was broad, with goods-producing sectors
(construction and manufacturing) generating one-third of the
new jobs and the remaining produced by the services-providing
sectors. Manufacturing held steady at 296,000 jobs.  
The labor force increased more than employment, reflecting an
increase in the number of job seekers. Consequently, the unem-
ployment rate ticked higher to 9.5 percent from 9.4 percent in
the previous quarter. The number of unemployed workers rose
but can be attributed to a rise in those reentering the labor force.
Initial  claims  for  unemployment  insurance  declined  again,
falling to an average of 7,191 per week, down from 7,655 in the
previous quarter, for the eighth consecutive quarterly decline.
Falling initial claims suggests downward pressure on the unem-
ployment rate in future quarters (Figure 1). 
Sales tax collections increased but at a slower pace during the
first quarter, rising 0.4 percent from the previous quarter. Very
poor weather may be part of the reason for the much lower
increase in sales. Collections are 5.7 percent higher over the year
after seasonal adjustments.
Housing Construction
Building permits issued for single-family home construction
rose 4.8 percent in the first quarter to 10,600 units (annualized
continued on page 2
berc 
TENNESSEE HOUSING MARKET
1st Quarter 2011
Figure 1. Tennessee initial claims for unemployment insurance 
(quarterly averages of weekly data, seasonally adjusted)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Source: U.S. Dept. of Labor, Employment & Training Administration
2007 2008 2009 2010 2011
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
David A. Penn, Director • Business and Economic Research Center • Jennings A. Jones College of Business • Middle Tennessee State University 0
Tennessee Housing Market Brief 1st Quarter 2011
Figure 2. Tennessee single-family home permits (seasonally adjusted annual rate, thousand units)
berc  2
2008 2009 2010 2011
1
Seasonally adjusted
Trend
Table 2. Permits issued for privately owned new housing (thousands, seasonally adjusted annual rate)
Single-Family Permits Multi-Family Permits Total Permits
Quarter Tennessee South U.S.  Tennessee South U.S. Tennessee South U.S.
2007.2 29.2  528.3  1,031.7  7.3 204.3 425.0 36.5 732.7 1,456.7
2007.3 27.2  474.7  916.3  6.2 163.3 398.0 33.4 638.0 1,314.3
2007.4 22.5  414.0  786.0  9.4 175.3 402.3 31.9 589.3 1,188.3
2008.1 18.5  366.3  671.3  5.1 170.0 353.7 23.6 536.3 1,025.0
2008.2 17.2 333.7  633.0  3.6 152.7 428.0 20.9 486.3 1,061.0
2008.3 15.5 283.7  547.7  5.5 162.7 311.0 21.0 446.3 858.7
2008.4 10.0 215.3 417.7 5.3 106.3 221.0 15.3 321.7 638.7
2009.1 10.5  202.7  366.7  2.4 83.0 179.0 12.9 285.7 545.7
2009.2 11.0 222.7 423.7 3.9 67.3 134.0 14.9 290.0 557.7
2009.3 12.8 248.7 478.0 1.0 54.7 122.7 13.8 303.3 600.7
2009.4 13.7 254.0 491.3 2.0 56.3 134.7 15.7 310.3 626.0
2010.1 13.3 270.7 524.7 6.1 57.3 130.0 19.4 328.0 654.7
2010.2 12.5 235.0 447.7 4.6 60.7 141.3 17.1 295.7 589.0
2010.3 10.3 207.0 403.7 4.1 69.3 155.3 14.4 276.3 559.0
2010.4 10.1 206.0 421.0 2.1 53.3 153.3 12.2 259.3 574.3
2011.1 10.6 213.7 400.3 1.6 76.7 160.3 12.2 290.3 560.7
Change from previous quarter 4.8% 3.7% -4.9% -24.0% 43.8% 4.6% -0.1% 12.0% -2.4%
Change from previous year -20.2% -21.1% -23.7% -73.9% 33.7% 23.3% -3 7.0% -11.5% -14.4%
Source: Census Bureau 
25
20
15
10
5
T
h
o
u
s
a
n
d
s
Source: Census Bureau, with seasonal adjustment
rate) from a very low level in the previous quarter (Table 2). A
similar increase occurred in the Southern states, but the U.S.
experienced a drop in single-family construction. Overall, sin-
gle-family permits have changed little during the past three quar-
ters, suggesting a modest degree of stability. Monthly figures
show that single-family permits have been stable to slightly
increasing since late summer of 2010 (Figure 2).  
The number of total permits issued in Tennessee (single-family
plus multi-family) was unchanged from the previous quarter,
due to a decline in the number of multi-family permits. It is note-
worthy that the South experienced a large rise in multi-family
permits during the first quarter, suggesting increased demand
for apartments as an alternative to home ownership.
Real Estate Transactions and Mortgages
Note:  Fourth-quarter 2010 data in Figures 3 and 4 in the previ-
ous  report  are  incorrect.  Corrected  fourth-quarter  data  are
shown here in Figures 3 and 4. The result is that the fourth quar-
ter was much stronger than previously reported. 
Taxes collected on new and refinanced mortgages fell during
the first quarter following two quarters of gains. Collections on
continued on page 3
continued from page 1
2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3real estate transactions were little changed and have shown lit-
tle change since mid-2009 (Figures 3 and 4). Transactions tax
collections can change when more transactions occur or when
the average value of transactions changes.  
Home Sales
Sales generally improved during the first quarter, rising 2.1 per-
cent in Nashville and 17.2 percent in Memphis from the fourth
quarter after seasonal adjustment. Sales in the Knoxville area
show little change (Figure 5). The gains provide more evidence
that the housing market continues to adjust to an environment
that does not depend on the homebuyers’ tax credit to shore up
demand. Over the year, Nashville sales are down 3.2 percent,
while Memphis is little changed at +0.7 percent.  Knoxville clos-
ings are 13.4 lower from the first quarter of 2010. Inventories
declined in all three areas, partially due to rising sales but also
perhaps due to weaker prices.  
According to the National Association of Realtors, sales for Ten-
nessee, including single-family and condos, rose 5.7 percent
from the fourth quarter to a seasonally adjusted annual rate of
96,800 units. Nationally, sales were up 8.3 percent, led by
increases in the West and South. Compared with the same quar-
ter of 2010, however, sales are down significantly, -14.5 percent
for Tennessee and -0.8 percent for the United States.
Mortgage Delinquencies and Foreclosures
Note:  First-quarter source data for Table 3 is not yet available.
The most recent available data for mortgage delinquencies and
foreclosures in Tennessee offer a mixed message. First, the num-
ber of mortgages that are past due fell again in the fourth quar-
ter to 9.99 percent from 10.4 percent in the previous quarter, the
second consecutive monthly decline. 
Figure 4. Mortgage tax collections (seasonally adjusted annual rate)
$30
$90
$80
$70
$60
$50
$40
M
i
l
l
i
o
n
s
Source: Tennessee Department of Revenue and BERC
berc  3
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
M
i
l
l
i
o
n
s
Source: Tennessee Department of Revenue and BERC
continued on page 4
continued from page 2
Figure 3. Real estate transfer tax collections (seasonally adjusted annual rate)
Tennessee Housing Market Brief 1st Quarter 2011
1
2004 2005 2006 2007 2008 2009 2010 2011
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
1
2004 2005 2006 2007 2008 2009 2010 2011
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1However, the number of new foreclosures increased again, ris-
ing to 0.99 percent from 0.95 percent in the previous quarter,
the second month of increases.  
Home Prices
Home-price data lag one quarter behind most other data in this
report; the latest available data pertain to the fourth quarter 2010.
Home prices continued to drop for both Tennessee and the U.S.,
but Tennessee experienced the smaller decline (Table 4), as
measured by the repeat-sale price index developed by the Fed-
eral Housing Finance Administration.  The steady improvement
experienced by most areas of the state stalled or was reversed
during the fourth quarter for several areas. Three metropolitan
areas (Chattanooga, Johnson City, and Kingsport-Bristol) expe-
rienced modest price gains during the quarter. Knoxville edged
closer to stability, with prices down by just 0.6 percent com-
pared with a 1.3 percent decline in the previous quarter. On the
other hand, price declines accelerated for Memphis, Clarksville,
Cleveland, and Morristown. Prices continued to fall in the
Nashville metropolitan area but at a slightly lower rate. Once
again, stable prices are a must for the beginning of any recovery
of the housing market.
Conclusion
The housing market showed marginal improvement during the
first quarter, with housing construction stable and home sales
up from the previous quarter. What’s missing is a boost from
firmer housing prices, and the data for the first quarter offer lit-
tle evidence that rising prices will soon occur. Other than the
housing sector, the rest of the Tennessee economy is improving
a little faster, as evidenced by sustained but modest job growth.  
Table 4. Change in housing prices year to year
Area 2009.1–2010.1  2009.2–2010.2 2009.3–2010.3 2009.4–2010.4
U.S. -6.4% -4.5% -0.9% -1.3%
Tennessee -4.5% -3.6% -0.9% -1.0%
Chattanooga MSA -3.6% -2.3% 0.5% 0.4%
Clarksville MSA -1.2% 0.2% 1.4% -1.7%
Cleveland MSA -3.1% -2.8% -1.7% -1.9%
Jackson MSA -5.5% -1.5% -2.5% -2.5%
Johnson City MSA -1.6% -0.1% 1.2% 0.7%
Kingsport-Bristol MSA -1.9% -0.7% -0.9% 0.5%
Knoxville MSA -3.8% -3.9% -1.3% -0.6%
Memphis MSA -6.2% -4.7% -0.8% -2.4%
Morristown MSA -6.4% -7.4% -1.8% -4.0%
Nashville MSA -4.6% -3.3% -0.7% -0.5%
TN nonmetro areas  -5.1% -4.2% -1.3% -0.4%
Source: Federal Housing Finance Agency All Transactions Index
Table 3. Mortgages past due, new foreclosures started, and foreclosure inventory 
(% of mortgages serviced, seasonally adjusted except foreclosure inventory) 
Tennessee United States
Mortgages  Foreclosures started  Foreclosure inventory Mortgages  Foreclosures started  Foreclosure inventory
Quarter past due during quarter at end of quarter past due during quarter at end of quarter
2008.1 7.72 0.71 1.50 6.35 0.99 2.47
2008.2 7.92 0.77 1.52 6.41 1.19 2.75
2008.3 8.37 0.76 1.58 6.99 1.07 2.97
2008.4 9.20 0.83 1.77 7.88 1.01 3.30
2009.1 10.01 0.93 1.98 9.12 1.34 3.85
2009.2 10.27 0.99 2.17 9.24 1.47 4.30
2009.3 10.66 1.00 2.26 9.64 1.42 4.47
2009.4 10.53 0.89 2.34 9.47 1.14 4.58
2010.1 10.79 0.99 2.41 10.06 1.17 4.63
2010.2 10.79 0.86 2.23 9.85 1.17 4.57
2010.3 10.34 0.95 2.11 9.13 1.32 4.39
2010.4 10.02 0.99 2.57 8.22 1.28 4.63
Source: Mortgage Bankers Association of America and BERC
Note: Table includes revisions to previous quarters.
berc  4
Tennessee Housing Market Brief 1st Quarter 2011
continued on page 5
continued from page 31
15,000
I
n
v
e
n
t
o
r
y
C
l
o
s
i
n
g
s
I
n
v
e
n
t
o
r
y
Closings
Inventory
Figure 5. Single-family sales and inventory (seasonally adjusted quarterly average of monthly figures) 
0
500
1,000
1,500
2,000
2,500
3,000 16,000
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
berc  5
Tennessee Housing Market Brief 1st Quarter 2011
C
l
o
s
i
n
g
s
I
n
v
e
n
t
o
r
y
Closings
Inventory
Nashville Area
Memphis Area
Knoxville Area
16,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
7,000
6,000
2006 2007 2008 2009
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
C
l
o
s
i
n
g
s
6,000
Closings
Inventory
900
1,100
1,300
1,500
1,700
1,900
2,100
2,300
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
Source: Greater Nashville Association of Realtors, Memphis Area Association of Realtors, Knoxville Area Association of Realtors, and BERC
2010 2011

Tennessee Housing Market: 1st Quarter 2011

http://frank.mtsu.edu/~berc/pdfs/housingbrief1Q11.pdf

Tennessee Housing Market: 1st Quarter 2011

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