Tennessee Real Estate Market: What to Expect in 2024 & 2025?

✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.

The current median home sale price of $388,600 is stable and rising steadily at 1.9% YoY. Moreover, homes spend 40 days on the market. This indicates that the Tennessee real estate market is moderately competitive.

The average months of home supply are 4 months YoY. A market with a slightly lower months of supply indicates a seller’s market. Additionally, the number of homes sold rose by 6.5% YoY in July. There were 8,307 homes sold in July 2024, up 7,803 homes sold in July 2024.

Despite a healthy level of activity in the market, with home sales on the rise and a stable supply, the recent NAR settlement has introduced some uncertainty. People are anxious about the selling prices and agents’ compensation.

The NAR settlement has removed the buyers’ agent compensation and many MLSs have followed the suit. It will probably reduce the home selling prices. As a result, buyers will have improved affordability along with low mortgage rates. Here are some tips for you to sustain in the market:

• If You Are a Home Buyer: Homes for sale (39,080) are growing at 21%. Along with this, the expected drop in home prices can benefit you. The low interest rates at 6.48%-6.51% are now in buyers’ favor. Also, in case of low housing demand and prices, you can request for seller concessions.
• If You Are a Home Seller: You can lock in Tennessee’s current high home prices. The correction in the home prices is long overdue. In the wake of the NAR settlement, home prices may drop a little more. If you’re a seller, you can still make profits on home sale before prices potentially drop.

So, How Is the Real Estate Market in Tennessee?

Balanced!

The number of homes for sale increased by 21% in July 2024 compared to the previous year. This is the 5th consecutive month the housing market has witnessed such growth. Other important facts are:

• Median Days on Market: The median days on market for homes for sale are 50 days, up by 4 days YoY. This trend suggests a slightly lower demand in the Tennessee real estate market.
• Housing Inventory and Supply: As a buyer, you have more options now as the housing inventory is up by 21%. There are 39,080 homes for sale in Tennessee, with an average supply of 4 months.
• Average Home Prices: The median home price in Tennessee is $388,600. But, it is expected to decrease due to a rise in inventory in the latter half of 2024. The sale-to-list price ratio is 98%, down by 0.31pt YoY.
• Home Sales: As per July 2024 data, home sales increased by 6.5% YoY! 8,307 homes were sold, compared to 7,803 last year.
• Average Rent Prices: Rental costs vary statewide. The median rent is $1,800 with month-over-month change is -$3.

Why Is Tennessee a Seller’s Market Now?

Tennessee real estate market has balanced inventory of homes for sale. Besides this, a steady increase in median home prices, favors home sellers. Homes spend 50 days on the market which depicts a moderately competitive market.

Let’s look at some more facts:

• Moderate Time on the Market: Homes are spending 50 days on the market before going under contract. This is visible in metro cities like Chattanooga and Nashville where the average days on market is between 49 to 51 days.
• Multiple Offers on Homes: Chattanooga has got 43 and Nashville got 47 in Redfin’s Compete Score. It means the housing market in Tennessee is moderately competitive. It shows that many homes get multiple offers, some even sold without contingencies.
• High Sale-To-List Price: The average homes sell for about 1% above list price whereas hot homes sell for about 3% above list price. The average sale-to-list price ratio in Nashville is 98.1%.
• Homes Sell Above List Price: On average, 18.2% homes sell above list prices. However, in July, 31.6% of homes experienced price drops, compared to 24.8% last year. This trend indicates a gradual shift toward a seller’s market.

Tennessee Housing Market Predictions 2024

Here are the predictions for Washington’s housing market in the remaining months of 2024 and 2025:

1. Number of Home Buyers Will Increase: As inventory grows and homes stay on the market, more home shoppers are expected to re-enter the market. The historically high interest rates averted buyers in 2023. But the easing inflation and stabilizing rates will bring back house hunters.
2. Home Prices Will Continue to Rise: Home prices rose steadily in the top metros across TN YoY, reaching $388K in July 2024. Cities like Crossville expect a surge of 6.5% in home prices by March 31, 2025.
3. New Home Constructions Sales Will Increase: As per Building Permits for Tennessee, 3,422 new private housing units were authorized. It has increased continuously.
4. iBuyers Will Continue to Make Lowball Offers: iBuyers like Opendoor and Offerpad, which once offered 104.1% of market value in 2021, now offer around 70%. Such lowball offers to sellers will increase opportunities for individual buyers.

Bonus Predictions: Buyer Broker Commissions Will Be Zero!

In a shocking turn of events, the NAR settlement has completely eliminated buyer agent fees from the MLS. Let’s understand its impact:

1. Buyer Agents Will Be Affected: With buyers now responsible for directly paying their agents, many may choose to find their homes on their own. This may very soon render buyer agents obsolete.
2. Seller Concession Will Increase: Without the obligation to pay buyer agent commissions, sellers might see increased requests for seller concessions and offline transactions. Additionally, builders are offering significant concessions to attract buyers, further influencing the market dynamics.
3. Builders Will Compete More: Home builders are persuading buyers to buy new construction homes with mortgage buydowns worth $30K!
4. Sellers May Offer Fees for Services: Sellers may offer at least 1%-2% fees to the buyer agents in order to sell their homes quickly. Increasing competition from builders may also cause sellers to pay extra fees to buyer agents.

Is the Housing Market in Tennessee Going to Crash?

A housing market crash in Volunteer State is unlikely.

Tennessee boasts one of the nation’s most thriving economies. TN has 35th highest household income in U.S. which is $28,764.

Crossville shows a projection of 6.5% rise by March 31, 2025. Nashville has the largest population and is the home to companies like Nissan North America and HCA Healthcare. With a population of around 687,150, it’s the fastest-growing city in Tennessee.

The average cost of living in Tennessee is $42,469. The median household income is $74,580. With its affordability and proximity to major job markets, Tennessee’s housing market is unlikely to experience a significant downturn in the near future.

Tennessee’s job market is also strong with only 3% of unemployment rate. and its private-sector employment has increased 2.83% of the past 12 months. This affordability, combined with strong economy, makes a housing market crash in Tennessee unlikely.

2024: Is it a Buyer’s or Seller’s Market?///

The Tennessee real estate market favors sellers in 2024, with conditions expected to lean even more in their favor in the latter half of the year. While buyers can still find opportunities, the market dynamics are currently more advantageous for sellers.

Home prices are rising slowly, and the number of homes for sale has increased by 21% YoY, giving buyers more choices. However, with mortgage rates around 6.37%, buyers’ purchasing power may be limited despite the increased inventory.

Consequently, more homeowners are likely to list their properties on Tennessee MLS. The 12.1% increase in new active home listings in Tennessee has attracted more home shoppers. Whether you are looking for a condo or a single-family home, you can expect to find more options in the coming months.

The increase in new home listings in Tennessee has also brought back home shoppers who were hugging the sidelines. In fact, the recent uptick in mortgage applications shows that buyers are returning.

House hunters who could not find affordable homes in 2023 will also start shopping in 2024. The demand for Tennessee houses will increase – and that’s why sellers may be able to dominate the market.

However, new builds will compete for attention from buyers. Home builders have persuaded buyers to buy new construction homes with mortgage buydowns worth $30K in 2023! Builders will continue offering concessions in 2024, and home sellers may have to wage wars against them.

Listings of new constructions, baby boomers looking to downsize, and desperate home sellers will flood the market in 2024. The properties for sale in Tennessee will increase. So, whether you are looking for a condo in Nashville or a single-family primary home in Knoxville, you will find your dream home next spring.

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Disclaimer: This article is for informational purposes only. It does not constitute an offer, solicitation of an offer, or any advice or recommendation. Houzeo doesn’t provide any legal or financial advice. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Houzeo Corp., its affiliates, or its employees. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any investment decision.

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