Tennessee Housing Market: Trends and Forecast 2024-2025

Thinking about buying a home in Tennessee, or maybe just curious about the current Tennessee housing market? You've come to the right place. This isn't your average dry real estate report; we're going to explore the ups and downs, the trends, and what it all means for you. Get ready for an in-depth look at the Tennessee housing market.

Tennessee Housing Market Trends: A Deep Dive for 2024

Home Sales

The Tennessee housing market in September 2024 showed a bit of a mixed bag. While home prices are up, the number of homes actually sold decreased slightly. This could mean a few things: buyers are being more selective, prices are pushing some buyers out of the market, or there's just less inventory available. It's a pretty typical scenario in many markets. My gut feeling is that the slight dip in sales isn't a major red flag, especially considering the increase in home prices. We might just be seeing a shift towards a more balanced market rather than a dramatic decline.

According to Redfin data from September 2024:

• Median Sale Price: $383,200 (+4.9% year-over-year)
• Number of Homes Sold: 7,095 (-3.3% year-over-year)
• Median Days on Market: 57 (+7 days year-over-year)

This data suggests that while prices are climbing, homes are staying on the market a bit longer. This could be a positive for buyers, giving them slightly more time to find the right property and potentially negotiate a better deal.

Home Prices

The increase in median sale price is noteworthy. A 4.9% year-over-year jump indicates a still-strong market, although the rate of increase is moderating compared to previous years' dramatic price spikes. This suggests a market that's settling down from the frenetic pace seen recently. The numbers indicate a steady, sustainable growth, rather than a bubble about to burst.

Top 10 Metros in Tennessee with Fastest Growing Sales Prices (September 2024)

City	Growth (%)
Brentwood, TN	40.0
Dickson, TN	27.4
Jackson, TN	23.4
East Ridge, TN	17.9
Ooltewah, TN	15.4
Smyrna, TN	14.4
Bristol, TN	13.0
Knoxville, TN	12.7
Cookeville, TN	11.5
Collierville, TN	11.4

These numbers clearly illustrate the price variance across Tennessee. It's wise to focus on specific areas if you are actively searching for a home. It seems the Nashville area is continuing to see strong growth, but we need to look beyond the largest cities and consider smaller towns too.

Housing Supply

The increase in the number of homes for sale is a significant development. In September 2024, there were 38,470 homes on the market in Tennessee, a 17.3% year-over-year jump. This rise in inventory is a game-changer, especially for buyers who have been frustrated by limited choices in the past.

Based on Redfin's September 2024 Data:

• Number of Homes for Sale: 38,470 (+17.3% year-over-year)
• Number of Newly Listed Homes: 9,397 (+3.9% year-over-year)
• Months of Supply: 4 (unchanged year-over-year)

A four-month supply generally points to a balanced market, suggesting a good mix of supply and demand. This contrasts sharply with the low inventory of previous years, giving buyers more negotiating power.

Market Trends

The Tennessee housing market appears to be shifting toward a more balanced state. While prices remain elevated, increased housing inventory and a longer time on market indicate a slight cool-down from the previous seller's market conditions. This balanced market is more sustainable and healthy in the long run.

Here's a look at the competitiveness:

• Homes Sold Above List Price: 16.5% (-2.7 percentage points year-over-year)
• Homes with Price Drops: 28.1% (+2.1 percentage points year-over-year)
• Sale-to-List Price Ratio: 97.5% (-0.39 percentage points year-over-year)

The decrease in homes sold above list price and the rise in homes with price drops reinforce the narrative of a cooling, but still reasonably strong, market. The sale-to-list price ratio also being close to 100% reflects this. This doesn't necessarily point to a crash, but rather the market becoming more balanced and predictable.

Top 10 Most Competitive Cities in Tennessee (September 2024)

City
Blountville, TN
Gladeville, TN
Dandridge, TN
Bloomingdale, TN
Millington, TN
Medina, TN
Colonial Heights, TN
Karns, TN
Lexington, TN
Martin, TN

Delinquencies and Foreclosures: A Look at Stability

It's important to understand the financial health of the market. Data from the Mortgage Bankers Association (MBA) shows mortgage delinquency rates in Tennessee. While the overall delinquency rate is higher than a year ago, it's still lower than the peak seen right after the pandemic began. This suggests a relatively resilient market, but it also highlights the increasing importance of responsible borrowing. FHA-insured loans show a higher delinquency rate compared to other loan types. This is something that should be noted if you are considering such a loan.

Here's a summary of the delinquency data:

Loan Type	Delinquency Rate (Q2 2024)
All Loans	3.92%
Conventional Loans	2.64%
FHA Loans	9.44%
VA Loans	4.66%

Importantly, Tennessee's serious delinquency rate (90+ days delinquent and in foreclosure) remains below the national average. This is a positive sign of overall market health.

Who's Buying? A Look at Homeownership Trends

Homeownership isn't evenly distributed across all demographics. Data from the THDA and the American Community Survey paints a picture of homeownership in Tennessee, with a particular focus on Black homeownership rates. There is a noticeable difference in homeownership rates for Black households compared to the overall population. In Shelby County, for instance, Black homeownership rates have declined somewhat since 2010. Understanding these disparities is crucial for creating more equitable housing opportunities.

Here's a table illustrating this, taken from the American Community Survey and THDA data:

Year	Black Homeownership Rate in Shelby County	Black Homeownership Rate in Tennessee
2010	49%	47%
2022	42%	44%

These numbers underscore the need to address the persistent challenges Black homeowners face, in both acquiring and maintaining homeownership.

Building Permits and New Construction:

The Census Bureau's Building Permits Survey gives us insights into new home construction in Tennessee. The number of new privately-owned housing units authorized by building permits has fluctuated in recent months, indicating that the rate of new housing construction varies with time. This affects supply, which directly relates to home prices and availability. The data shows a significant number of single-family homes were included in the total permit number. This information is critical to understanding the Tennessee housing market‘s capacity to meet the demand.

Rental Market Insights:

The rental market in Tennessee is also experiencing some notable shifts. CoStar data shows that rental vacancy rates and rent growth have been on a shifting trajectory in major metro areas. Rent growth has slowed down in Nashville, while increases in other areas show a more moderate increase than years prior.

Here’s a table summarizing key rental market indicators in the major metro areas (data is from CoStar):

Metro Area	Vacancy Rate Trend (Compared to Last Year)	Rent Growth Trend (Year-over-year)	Absorption Rate Trend
Chattanooga	Higher	Declining	Lower
Knoxville	Higher	Increasing	Higher
Clarksville	Higher	Increasing	Higher
Nashville	Higher	Declining	Higher
Memphis	Higher	Increasing	Higher

Absorption Rate refers to how quickly rental properties are being leased. A higher absorption rate typically indicates strong rental demand.

Tennessee Housing Market Forecast 2024-2025

Looking Ahead: What to Expect

Predicting the future is always tricky, but some things seem likely. The Tennessee housing market is likely to remain competitive, but less frenzied than it was recently. We’re seeing shifts in home prices and inventory, which should encourage some market stability. The economic conditions within Tennessee itself, alongside national and international issues, will continue to influence the market. Paying attention to interest rates and local economic news will keep you informed on the trends.

Let's dive into a detailed forecast, exploring what the next year and beyond might hold for this exciting state.

According to Zillow, the average Tennessee home value currently sits at $320,181, a modest increase of 2.8% over the past year. Homes in Tennessee are going pending in about 25 days. This suggests a market that's neither incredibly hot nor completely stagnant – a “Goldilocks” scenario, if you will.

However, this average hides significant regional differences, which we'll explore in detail. While the overall picture shows moderate growth, the Tennessee housing market forecast paints a more nuanced picture.

Key Factors Shaping the Tennessee Housing Market Forecast

Several interconnected factors influence the Tennessee housing market forecast:

• Interest Rates: The Federal Reserve's actions regarding interest rates heavily influence mortgage affordability. Higher rates typically cool the market, while lower rates can fuel demand. We'll need to closely monitor these changes and their ripple effect.
• Inventory Levels: The number of homes available for sale is a critical factor. Low inventory typically leads to higher prices and increased competition among buyers. Conversely, higher inventory tends to favor buyers with more options and potentially lower prices.
• Economic Conditions: The overall state and national economy are intertwined with real estate. Job growth, inflation, and consumer confidence all play a role in how buyers and sellers behave.
• Regional Differences: Tennessee is diverse, with booming urban centers and quieter rural areas. The Tennessee housing market forecast must account for these significant regional variations.

 

Tennessee Housing Market Forecast: A Regional Breakdown (October 2024 – September 2025)

Now for the good stuff – the Tennessee housing market forecast for various Metropolitan Statistical Areas (MSAs). The following data represents a prediction, based on available data and market analysis, of home price changes from September 30, 2024, to the specified dates:

Region Name	Region Type	Projected Change (%)	October 31, 2024	December 31, 2024	September 30, 2025
Nashville, TN	MSA	Moderate Decline then Growth	-0.1	-0.8	0.1
Memphis, TN	MSA	Decline	-0.3	-1.0	-0.1
Knoxville, TN	MSA	Significant Growth	0	-0.2	3.8
Chattanooga, TN	MSA	Growth	0	-0.3	1.7
Clarksville, TN	MSA	Growth	-0.1	-0.5	1.8
Kingsport, TN	MSA	Growth	-0.1	-0.6	1.4
Johnson City, TN	MSA	Growth	-0.2	-0.5	2.2
Jackson, TN	MSA	Moderate Decline then Growth	-0.3	-0.9	0.3
Morristown, TN	MSA	Significant Growth	0	0	2.0
Cleveland, TN	MSA	Growth	0.1	-0.1	2.5
Cookeville, TN	MSA	Decline then Growth	-0.3	-0.8	1.0
Tullahoma, TN	MSA	Growth	0	-0.3	2.1
Sevierville, TN	MSA	Decline then Growth	-0.4	-1.5	1.3
Greeneville, TN	MSA	Decline then Growth	-0.6	-0.9	1.7
Crossville, TN	MSA	Growth	-0.3	-0.8	2.4
Athens, TN	MSA	Moderate Decline then Growth	-0.2	-0.5	0.8
Shelbyville, TN	MSA	Decline then Growth	0	-0.6	1.4
Lawrenceburg, TN	MSA	Moderate Decline then Growth	-0.2	-0.6	0.8
McMinnville, TN	MSA	Growth	0	-0.5	1.8
Dyersburg, TN	MSA	Decline	-0.2	-0.6	-1.3
Newport, TN	MSA	Decline then Growth	0	-0.4	0.1
Lewisburg, TN	MSA	Decline then Growth	-0.1	-0.6	0.7
Martin, TN	MSA	Decline then Growth	-0.3	-0.9	0.8
Dayton, TN	MSA	Decline then Growth	-0.1	-0.5	0.4
Paris, TN	MSA	Significant Decline	-0.8	-2.0	-0.8
Union City, TN	MSA	Decline	-0.3	-1.2	-0.2

Disclaimer: These are projections, not guarantees. Market conditions can shift rapidly.

Will Home Prices Drop in Tennessee? Will There Be a Crash?

The short answer is: it's unlikely to see a significant market crash in Tennessee. While certain regions might experience temporary price dips (as indicated above), a full-blown crash seems improbable given the state's strong economic fundamentals and steady population growth. However, price growth may slow, and certain markets may see slight declines.

Tennessee Housing Market Forecast 2026 and Beyond

Looking further into 2026, I anticipate a continued moderation. Dramatic swings are less likely than a gradual adjustment. Areas experiencing strong population growth – think around Knoxville and Chattanooga – will probably continue to see upward price pressure, albeit at a more tempered pace. The recovery in some of the slower growth areas of the state, as indicated in our forecast, may continue. The key is to monitor interest rates and overall economic trends.

Regions Poised for Growth:

• Knoxville: Strong job market and continued population influx suggest potential for significant growth.
• Chattanooga: A desirable location with a growing economy and a high quality of life points to continued positive growth.
• Clarksville: Military presence and expanding job opportunities may propel price increases.

Regions Facing Challenges:

• Memphis and Paris: Economic conditions and limited job growth may lead to slower growth or even small price decreases.
• Dyersburg and Union City: These areas face headwinds which include fewer job opportunities and population trends.

Overall Market Sentiment:

While the Tennessee housing market is showing a healthy pulse, I believe it's crucial for buyers and sellers to stay informed and be prepared for potential fluctuations. Thorough research and the guidance of a qualified real estate professional are invaluable in navigating this dynamic environment.