East Tennessee Mid Year Market Update

[Cory King]

Data Deep Dive: How's the market?

What's the outlook for the rest of 2025?

If trends stay on track, we’ll likely see modest growth—maybe around 4.1%

Here’s the wildcard: mortgage rates. If rates drop to 6.5% or lower, it could fire up the fall market as any downward adjustment would unlock affordability for many.

The real issue? Inventory mismatch. Most listings are over $250K—but most buyers can’t afford that. In fact, 85% of active listings are out of reach for the average household income. The average new construction home? $448,703.

The bulk of listings continue to lean toward larger, higher-priced homes, while demand is strongest in the more affordable range.

Bottom line: there’s momentum building, but we’ve still got a mismatch between what buyers want and what’s available.

ETN Realtors put out an awesome housing report which can be found HERE

I took some time to dive into it and summarized below if it's not your idea of a fun read.

2025 Housing Snapshot – East Tennessee  

1. We’re seeing signs of a market that's slowly finding balance. After a couple of years of price spikes and inventory shortages, things are settling down. Prices are still climbing, but not at the pace we saw during the boom. That’s giving buyers and sellers a little more breathing room. 

2. Inventory is finally back to pre-pandemic levels. We’re not where we need to be yet—especially with 50,000 new residents added since 2020—but the worst of the shortage may be behind us. Still, we’re playing catch-up after more than a decade of under building. 

3.East Tennessee’s economy is holding strong. Job growth is steady, unemployment is low, and the area continues to attract new residents and businesses. It’s a big reason why our housing market has stayed more stable than others around the country. 

4. Housing demand remains high, but buyers are cautious. Higher mortgage rates, affordability concerns, and overall economic uncertainty are keeping some buyers on the sidelines. But the demand is there—just waiting for the right mix of price and payment. 

5. Affordability is a major issue. The Housing Affordability Index hit a 40-year low in 2024. For a family making the median income of $70K, only about 15% of active listings are affordable. To afford half of the homes for sale, a household would need to earn $136K or more. 

6. We’ve got an inventory mismatch. Most of the homes for sale are priced out of reach for the average buyer. The biggest demand is for smaller, entry-level homes—but what’s being built is bigger and more expensive. That’s not a sustainable long-term model. 

7. New construction is picking up, but not fast enough. Builders have been adding homes, but the pace still falls short of population growth. Multifamily builds have helped, but even with apartment occupancy near 97%, demand is outpacing supply. 

8. Investor activity has cooled. Big institutional buyers that flooded the market in 2021–2022 have pulled back. In 2024, investor purchases made up just under 9% of home sales, down from 14% at the peak. That’s helped ease competition a bit for regular buyers. 

9. The rental market is still tight. Rents jumped 62% since 2020. Even though construction added thousands of new apartments, occupancy is still high and rent growth is expected to continue—just at a slower pace. 

10. Mortgage rates are driving market behavior. The "lock-in effect"—where homeowners don’t want to give up their low rates—has kept inventory tight. But that’s easing as life changes push more people to move anyway. 

11. Demographics are shifting. Knoxville’s population is aging fast. People 65+ are the fastest-growing group, and workforce participation is declining. At the same time, millennials are entering their peak buying years, which adds more pressure to the housing supply. 

12. The long game is about building the right kind of housing. We need smart growth—more small, affordable homes in walkable communities. That means policy changes, zoning updates, and support for builders willing to meet real buyer needs.