Tennessee Housing Market: Trends and Forecast 2025-2026

Wondering what's happening with houses in Tennessee right now? If you're thinking about buying or selling, it's crucial to know current Tennessee housing market trends. The short answer is this: While prices are still up compared to last year, the market is showing signs of cooling with more homes available and fewer bidding wars. Let's dive into the details and see what's really going on.

Current Tennessee Housing Market Trends:

Home Sales

Let's start by taking a look at home sales. According to recent data by Redfin, 5,070 homes were sold in Tennessee in January 2025. This represents an increase of 2.7% compared to January of last year. While this might sound like a strong market, it's important to remember that the housing market often fluctuates seasonally, so what's happening in January might not be indicative of the trends for the rest of the year. It will be important to watch the data closely as Spring approaches.

Home Prices

The median sale price for a home in Tennessee in January 2025 was $383,300. This is a 5.2% increase compared to January of last year. This means home values have continued to go up, although the rate of increase may not be as dramatic as what we saw in the boom years of the pandemic.

Here is a table to give you a quick overview of the trends in home sales and prices in the last year:

Metric	January 2025	Year-over-Year Change
Median Sale Price	$383,300	+5.2%
Number of Homes Sold	5,070	+2.7%

Are Home Prices Dropping?

While the median sale price is still up year-over-year, we are starting to see other indicators of a softening market. The percentage of homes sold above list price, for example, is down 1.5 points year-over-year. We are also seeing a lot more price drops: In January 2025, 24.2% of homes in Tennessee had price drops, which is 4.9 percentage points more than the previous year. This suggests that sellers might need to be more realistic about their asking prices in order to attract buyers.

Also, the rate of price increase is softening compared to previous years. While a 5.2% increase is good for the sellers, it is lower than what we have seen in the last few years. So, it's unlikely we'll see dramatic price drops across the board, we'll see a slowing pace of price growth.

Comparison with Current National Median Price

How does Tennessee stack up against the rest of the country? According to the most recent data, the national median home price is $407,500, with a year-over-year change of +6% (December 2024). Tennessee's median price of $383,300 is slightly below the national average, making it a comparatively affordable state to live in. This relative affordability, combined with other factors, could continue to drive demand in the Tennessee housing market.

Housing Supply

One of the biggest shifts in the Tennessee housing market has been the increase in housing supply. In January 2025, there were 34,580 homes for sale in Tennessee. That's a 16.3% increase compared to the previous year. The number of newly listed homes has also increased by 18.4% year-over-year. All of this extra supply gives buyers more options and more bargaining power.

Months of supply, which is how long it would take to sell all the homes on the market at the current sales pace, is at 5 months.

Is It a Buyer's or Seller's Housing Market?

This is the million-dollar question! Generally, a market with less than 4 months of supply is considered a seller's market, meaning sellers have the upper hand because there are more buyers than homes available. A market with more than 6 months of supply is considered a buyer's market, where buyers have more leverage. A market with between 4 and 6 months of supply is considered balanced. With Tennessee sitting at 5 months of supply, that puts us at a balanced market.

Market Trends

Here are some notable trends I am seeing in the Tennessee housing market:

• Increase in Inventory: As mentioned earlier, the number of homes for sale is up significantly, giving buyers more options and potentially slowing down price appreciation.
• Slowing Price Growth: While prices are still up year-over-year, the rate of increase is starting to slow down.
• Increased Days on Market: Homes are staying on the market for longer. The median days on market in January 2025 was 75 days, compared to 7 days higher than last year.
• Migration Patterns: Tennessee continues to be a popular destination for people moving from other states, particularly from California, New York, and Illinois. Nashville, in particular, is one of the top 10 metro areas people are moving to in the US.

Impact of High Mortgage Rates

It's impossible to talk about the housing market without addressing mortgage rates. As of February 2025, mortgage rates are currently hovering around 7%. This is significantly higher than the rates we saw just a few years ago, and it's having a major impact on affordability and buyer demand.

High mortgage rates mean that buyers have to pay more money each month to finance a home. This can price some buyers out of the market altogether, while others may have to lower their budgets or delay their home-buying plans. The impact of interest rates on a monthly mortgage payment is significant.

Top 10 Metros in Tennessee with the Fastest Growing Sales Price

It's important to note that housing market conditions can vary significantly from one city to another. Here's a list of the top 10 metros in Tennessee with the fastest-growing sales prices:

1. Hendersonville, TN 40.6%
2. Kingsport, TN 35.0%
3. Farragut, TN 24.6%
4. Bristol, TN 23.3%
5. Johnson City, TN 18.4%
6. Memphis, TN 15.6%
7. Murfreesboro, TN 11.7%
8. Jackson, TN 11.6%
9. Spring Hill, TN 11.1%
10. Nashville, TN 8.0%

This tells me that the housing markets in these cities are in high demand and are potentially great investment opportunities for those that are looking to sell in these areas.

Tennessee Housing Market Forecast: What's Next for the Volunteer State?

So, will home prices keep climbing, or are we heading for a cooldown? Here's the quick answer: Experts predict a continued, but more moderate, increase in home values across most of Tennessee in the coming year.

As someone who's been watching the real estate market for years, I know how confusing it can be. Let's break down the latest data and see what the future might hold for Tennessee homeowners and potential buyers.

Right now, the housing market in Tennessee is showing signs of stability. While we saw huge jumps in prices over the last few years, things are starting to level out a bit.

The average home value in Tennessee is currently around $318,456, according to recent data. This represents a 2.3% increase over the past year.* While still an increase, it's significantly less dramatic than what we've seen in previous years.

Another key factor is the time it takes for a home to go from listing to pending. Currently, homes in Tennessee are going to pending status in approximately 39 days. This suggests that while demand is still present, buyers are taking their time and are being more selective.

Tennessee Housing Market Forecast for 2025

Zillow's data provides a more granular look at what's expected across different Metropolitan Statistical Areas (MSAs) in Tennessee. Here's a summary of their predictions, showing the projected percentage change in home values:

City	Projected Growth by Jan 2025	Projected Growth by March 2025	Projected Growth by Dec 2025
Nashville	0.3%	1.1%	3.4%
Memphis	0.3%	1.2%	3.3%
Knoxville	0.4%	1.8%	7.0%
Chattanooga	0.3%	1.5%	4.8%
Clarksville	0.4%	1.4%	4.7%
Kingsport	0.6%	2.0%	5.4%
Johnson City	0.5%	2.1%	6.1%
Jackson	0.7%	2.2%	4.5%
Morristown	0.9%	2.3%	5.7%
Cleveland	0.5%	1.9%	5.7%
Cookeville	0.6%	2.1%	4.8%
Tullahoma	0.6%	1.9%	5.7%
Sevierville	-0.3%	0.1%	3.8%
Greeneville	0.7%	2.5%	7.0%
Crossville	0.3%	1.8%	6.6%
Athens	0.2%	1.2%	3.7%
Shelbyville	0.6%	1.6%	4.8%
Lawrenceburg	0.6%	2.1%	4.8%
McMinnville	0.5%	2.0%	5.4%
Dyersburg	0.5%	1.5%	1.7%
Newport	0.2%	1.1%	2.7%
Lewisburg	0.6%	1.8%	4.3%
Martin	0.6%	2.4%	5.2%
Dayton	0.6%	2.0%	4.4%
Paris	1.2%	2.9%	5.5%
Union City	0.5%	1.8%	3.9%

Key Takeaways from the Forecast:

• Most areas are expected to see continued growth, but the pace is projected to be slower than in recent years.
• Knoxville and Greeneville are predicted to have some of the strongest growth in the state.
• Sevierville is the only area showing a slight decrease in the short term (by January 2025).

Will the Tennessee Housing Market Crash?

A lot of people are worried about a housing market crash. While I can't predict the future with certainty, based on the data and current economic conditions, a major crash in Tennessee seems unlikely. A more probable scenario is a period of slower growth and potential price corrections in certain areas.

Several factors support this view:

• Strong Economy: Tennessee's economy is relatively strong, with growing job opportunities in various sectors.
• Population Growth: People are still moving to Tennessee, increasing demand for housing.
• Limited Inventory: While inventory is improving, there's still a shortage of available homes in many areas.

Looking Ahead: A Possible Forecast for 2026

Predicting the housing market beyond 2025 becomes even more challenging. However, if current trends continue, we can expect:

• Continued Moderate Growth: Home price appreciation will likely be more in line with historical averages (around 3-5% per year).
• Increased Inventory: As more homes are built and interest rates stabilize, buyers will have more options.
• Regional Differences: Some areas will continue to outperform others based on local economic conditions and demand.

Ultimately, making smart real estate decisions requires careful consideration of your personal circumstances and goals. Stay informed, consult with local real estate professionals, and make choices that align with your financial well-being.