We’re into the Q4 market and here's where things stand in the Knoxville Metro as September ends.

• Knox County home sales decreased 1.5% in Sept from 2025. We're also up in total inventory so sales would otherwise be relatively flat given the increase in listings.

• The median sale price was $402,588 — down .06% from the previous year. Year to date from the same time last year it's flat.

• New listing housing inventory is up 5.4% from Sept 2025.

• Half of the homes sold were under contract in 23 days or less, up from 19 days a year ago.

• 43% of homes sold for the asking price or above, with 18.7% selling for more than the asking price. 7.8% sold for at least $10,000 over asking and 2.5% sold for at least $25,000 over asking price.

• The sale-to-list price ratio sat at just over 95%, about same as last year same time, but down from 96% in August 2026 and a peak in March 2026 of 97%. 

• New construction dropped to only 10.7% of total home sales, down from 12% in 2025 and the lowest monthly percentage of total sales since 2022.

There will be two factors to watch for the remainder of 2026: interest rates, and inventory.

Interest rates will require a watchful eye, as global conflicts and energy prices continue to add pressure at the same time as a healthy job market and domestic GDP boost inflation. To counter this effect, the Federal Reserve has already hiked the bank rate once and has said that they plan to do so again potentially before the end of the year.

While anecdotal evidence from our members indicates that consumers are not as sensitive to rates as they were in the past, a jump of 1% translates to a loss of affordability that removes many potential buyers from the market. We can guess that this might have been responsible for some of the August sales slowdown.

Inventory will also have an effect, especially in the more affordable market segments. While East Tennessee housing inventory is returning rapidly and has reached 8,000 listings for the first time in nearly a decade, some types of homes were more depleted than others during the busy season.

As measured by price range, the most frequently sold home is in the $300-400,000 segment. Within that grouping, the majority of homes sold have 3 bedrooms and 2 bathrooms, and about 2,000 square feet of living space. This category represented nearly 30% of all homes sold year to date.

A basic affordability estimate indicates that these buyers likely had household incomes of around $85,000 and up, well above the median income.

As of September 30, only 1,200 of these homes are actively listed in East Tennessee, around 14% of available inventory.

New homes generally do not fall into this category, due to the increased cost of land, process delays, materials and labor. The median cost of new homes sold remained above $400,000 all year, reaching a peak of $475k in June.

Despite a marked increase in building, this price tension could help explain why new home sales have continued falling as a percentage of total sales, dipping to 10.7% in August - the lowest percentage of new home sales in any month since 2022. I've watched more of these builders offer some crazy rate buy downs or opportunities for investors to buy inventory where before they would've been excluded.

For my investors. I'm keeping my moves simple and clean. ARV no more than $325k. I wanna be all in for $250k or under for single family. Gives me action in selling or holding as rentals. Further outside the city, the lower I'm going on my ARV and therefor all in. That shifts to ARV $250k and all in $200k. I really like the NW, N, and NE Burbs around Knoxville as long term holds.

Multi family isn't as prevalent in our area, a market like Oak Ridge, TN offers a lot of options there (mostly 2-4 units).

With the increase in new construction also has brought the build to rent option and we're seeing investors get into really nice new multi family for close to a 1% rule. Low cap ex the first 10 years becomes a nice part of this strategy allowing some additional cash flow.

Be Excellent y'all