Summer 2025 East Tennessee Real Estate Outlook

Market Snapshot: East Tennessee in Summer 2025

According to the East Tennessee REALTORS® 2025 Housing Forecast, home prices in the region are expected to grow modestly by 2.9% annually, with total home sales forecasted to rise by 8.7% from the previous year. This growth is fueled by continued population increases and wage gains, especially in metro areas like Knoxville and Chattanooga.

Statewide, the median home price has reached $383,700, marking a 5.3% year-over-year increase. However, homes are spending more time on the market—averaging 75 days—which gives buyers more leverage in negotiations. ​

Mortgage Rates: Stabilizing but Still Elevated

Mortgage rates remain a key factor in buyer decision-making. The Mortgage Bankers Association (MBA) forecasts that rates will range between 6.4% and 6.6% in 2025, while holding steady at 6.3% in 2026. This stabilization may encourage more prospective homebuyers to enter the market, especially those who had been waiting for rates to drop further.​

Despite these elevated rates, some buyers are choosing to enter the market rather than wait for economic conditions to improve. Rising rent costs and the desire to build equity are motivating factors. ​

Inventory & Buyer Leverage

Inventory is on the rise across Tennessee, with a 16.8% year-over-year increase in homes for sale as of January 2025. This has created a more balanced market, with a 5-month supply period. The increase in available homes provides buyers with more options and negotiating power. 

Additionally, 23.8% of homes experienced price drops in January 2025, up 4.5 points year-over-year. This trend indicates that sellers may need to adjust pricing strategies to align with buyer expectations.​

Migration & Demographics

Tennessee continues to attract new residents, particularly from states like New York, California, and Illinois. Factors such as the absence of a state income tax and a lower cost of living contribute to this trend. Cities like Nashville, Clarksville, and Lebanon are experiencing significant inbound migration, which supports housing demand despite affordability challenges. 

Takeaways for Buyers and Sellers

For Buyers:

• Stabilizing mortgage rates and increased inventory provide more opportunities.

• Extended days on market and price reductions enhance negotiating power.

• Affordability remains a concern; careful budgeting and pre-approval are essential.​

For Sellers:

• Modest price growth suggests the need for realistic pricing strategies.

• Increased competition requires attention to home presentation and marketing.

• Understanding local market dynamics is crucial for successful sales.

Final Thoughts

The East Tennessee real estate market in summer 2025 offers a more balanced landscape compared to previous years. While challenges like affordability and elevated mortgage rates persist, increased inventory and stabilizing rates provide opportunities for both buyers and sellers. Staying informed and working with experienced real estate professionals can help navigate this evolving market.​