The Tennessee housing market has experienced fluctuations in home prices and sales volume. While prices have decreased compared to the previous year, certain cities have seen significant growth in sales prices. The availability of homes for sale has increased, but the number of newly listed homes has decreased.
The market remains competitive, with a notable percentage of homes selling above their list price. Let's delve into some trends which provide valuable insights for both buyers and sellers in navigating the dynamic housing market.
Tennessee Housing Market Update
The housing market in Tennessee has experienced some fluctuations in recent times. According to Redfin, in April 2023, home prices in the state were down 3.1% compared to the previous year, with a median price of $360,000. Additionally, the number of homes sold decreased by 25.4% year over year, with 6,885 homes sold in April. The median days on the market increased by 21 days compared to the previous year, reaching 51 days.
Median Sale Price of All Home Types
The median sale price of homes across the United States is currently $360,000. This figure serves as an indicator of the housing market's strength and affordability.
Top 10 Metros in Tennessee with the Fastest Growing Sales Price
Certain cities in Tennessee have experienced significant growth in sales prices. The top 10 metros with the fastest-growing sales prices include Winchester, TN with a growth rate of 54.2%, Soddy-Daisy, TN with 37.1%, Farragut, TN with 19.2%, McMinnville, TN with 17.7%, Elizabethton, TN with 17.1%, Oak Ridge, TN with 16.3%, Lebanon, TN with 12.1%, Mount Juliet, TN with 10.4%, Chattanooga, TN with 9.4%, and Knoxville, TN with 9.2%.
Tennessee Housing Supply
The availability of homes for sale is an essential factor in meeting buyer demand. In April 2023, there were 29,204 homes for sale in Tennessee, indicating a 20.5% increase compared to the previous year. However, the number of newly listed homes decreased by 15.7% year over year. The average months of supply increased by 1 year over year, reaching a total of 3 months.
Number of Homes for Sale of All Home Types
As we write this, there are 29,204 residential homes for sale in the United States. The direction and pace at which the housing supply changes play a significant role in determining whether buyers have more or fewer options available. It can also indicate whether homes are staying on the market for extended periods or being sold quickly.
Tennessee Housing Demand
The competitiveness of the housing market is an important aspect to consider. In April 2023, only 22.7% of homes in Tennessee sold below their list price, which is a significant decrease of 27.8 points compared to the previous year. Additionally, 21.4% of homes had price drops, showing an increase from 12.0% in April of the previous year. The sale-to-list price ratio was 98.3%, reflecting a 3.6-point decrease year over year.
Homes Sold Above List Price of All Home Types
When a significant percentage of homes sell above their list price, it suggests a highly competitive market with bidding wars becoming more common. Conversely, a low or decreasing percentage indicates a less competitive market. In Tennessee, 22.7% of homes sold above their list price in April 2023.
Tennessee Housing Market Forecast 2023-2024
The Tennessee housing market has been experiencing positive growth in home values over the past year. The average home value in the state is currently $297,185 (Zillow), reflecting a 4.7% increase compared to the previous year. Homes in Tennessee tend to go pending quickly, with a median time of around 14 days.
When looking at specific metropolitan statistical areas (MSAs) within Tennessee, there are positive forecasts for various regions. Here is a forecast of some notable MSAs in Tennessee:
Nashville, TN: The Nashville MSA is expected to see a slight increase in home values, with a forecasted change of 0.1% by May 31, 2023, and 0.7% by July 31, 2023. The forecast for April 30, 2024, shows a more significant growth of 5.5%.
Memphis, TN: The Memphis MSA is also projected to experience growth in home values. The forecast indicates a change of 0.3% by May 31, 2023, and 0.9% by July 31, 2023. By April 30, 2024, the forecast shows a further increase of 6.2%.
Knoxville, TN: The Knoxville MSA has a positive outlook for home values. The forecast predicts a change of 0.6% by May 31, 2023, and 1.6% by July 31, 2023. Looking ahead to April 30, 2024, the forecast shows a significant growth of 7.9%.
Chattanooga, TN: The Chattanooga MSA is expected to see a moderate increase in home values. The forecast indicates a change of 0.6% by May 31, 2023, and 1.2% by July 31, 2023. By April 30, 2024, the forecast shows a growth of 6.4%.
Clarksville, TN: The Clarksville MSA also shows positive growth in home values. The forecast predicts a change of 0.2% by May 31, 2023, and 0.9% by July 31, 2023. By April 30, 2024, the forecast shows a further increase of 6.1%.
These forecasts suggest that various MSAs in Tennessee are expected to experience growth in home values over the coming months. It's important to note that these projections are subject to change based on market conditions and other factors. However, they provide valuable insights for both buyers and sellers in understanding the direction of the housing market in different regions of Tennessee.
Other Factors That Can Impact the Housing Market in Tennessee
When the housing market is booming, it is partly caused by job growth and decreases in unemployment. The housing market is inextricably linked to the economy. The health of the economy and job growth affects real estate buyers' purchasing power. Tennessee has seen the job market increase by 1.8% over the last year.
Future job growth over the next ten years is predicted to be 41.6%, which is higher than the US average of 33.5%. Tennessee was ranked as the 11th best economy in the country in an analysis from WalletHub. The rankings included the 50 states and the District of Columbia, which ranked just ahead of Tennessee at 10th.
The state ranked fourth in terms of economic activity, fifth in terms of economic health, and 38th in terms of innovation potential. It topped the chart in terms of change in GDP from 2020 to 2021, a key factor in its economic activity ranking. Tennessee experienced 8.6% real GDP growth, trailing only New Hampshire (8.5%) and California (7.8%).
More people require housing as the population grows. This means that, in the long run, population growth drives increased demand for housing and, as a result, a strong real estate market. Population growth has a positive impact on the housing market. Middle Tennessee is an area that is constantly growing and according to the United States Census Bureau, Spring Hill in the region was among the top 10 cities for population growth.
Spring Hill was named the tenth fastest-growing city in the nation between 2020 and 2021. According to The Boyd Center for Business and Economic Research, Tennessee could grow by nearly a million people over the next 20 years and reach a total population of 7.87 million by 2040.
The number of people in their prime working years, ages 25 to 54, is projected to increase at a slower pace than the state’s population as a whole. Population growth in the state will slow over the next two decades. Between 2010 and 2020, Tennessee's population increased by 8.9 percent. It is expected to fall to 7.7 percent between 2020 and 2030. Between 2030 and 2040, it could slow even more to 6.2 percent.
The Tennessee Quarterly Business and Economic Indicators report, released by state leaders, illustrates the health of the state's economy. According to the report, 21,353 new businesses filed for the first time in the first quarter of 2022. This was an increase of more than 8% over the same quarter last year.
According to the report, 9,454 of those new businesses were registered in the state's four largest counties: Shelby, Davidson, Knox, and Hamilton. Knox County saw the greatest increase in new filings compared to last year, with 1,366 initial filings, a 14.2% increase. The report also says nominal personal income was $382.8 billion in the state during the fourth quarter of 2021, an increase of 7.4% compared to the previous quarter.
Sources:
- https://www.neighborhoodscout.com/tn/real-estate
- https://www.zillow.com/nashville-tn/home-values/
- https://www.newsweek.com/house-prices-falling-these-five-overvalued-cities-1739363
- https://fred.stlouisfed.org/series/TNSTHPI#
- https://www.bestplaces.net/economy/state/tennessee/
- https://tnsdc.utk.edu/2022/03/09/tennessee-could-add-nearly-1-million-new-residents-by-2040/
- https://www.wbir.com/article/money/economy/tennessee-economic-report-q1-2022/51-58fb9599-f0db-47ad-9316-94b102a1df54
