By
Hannah Griffith
|
14 min read
|
January 17, 2023

Tennessee Housing Market Report - 2023 Update

housing market tennessee

What’s the Tennessee Housing Market Like?

Home prices in Tennessee have appreciated 55.1% higher than the national level. Looking back three years at the median price in October 2019 compared to October 2022, prices have increased 47.0% in Tennessee VS 35.8% nationwide. 

As of October 2022, the median price for a home in the state was $372,000, which is up 7.6% above last year’s median price. Comparing prices over the last three years, we can see they have decreased -6.8% from the peak of $399,200 in May-2022. 

Sales volume has also decreased recently. In October 2022, there were 6,855 homes sold in the state of Tennessee, a decrease of -18.7% from the previous month. 

Comparing year-over-year, we saw a decrease of -26.8% sales from October 2021, when there were 9,361 home sales.

The number of sales peak was 10,691 sales in Jul-2020; compared to October 2022’s numbers, we are down -35.9% in the number of homes sold from the peak of the last three years.

It is clear that the recent steep rise in mortgage rates has curved sales activity and shrunk affordability, and the result has been a drop in home prices in Tennessee.

house prices Tennessee

How Does The Tennessee Housing Market Compare to the National Housing Market? 

The Tennessee housing market is similar to other markets because supply and demand drive housing prices. Mortgage rates also impact Tennessee in a similar way as the rest of the nation. 

Tennessee’s home prices and sales numbers have begun to slow down along with the rest of the country. Differences in the regional economy of some of Tennessee’s metro areas make those markets more vulnerable and others more resilient to the current economics. 

The current median price of homes in Tennessee is $372,000 compared to the national median sales price of $397,549. Over the past three years, the median price of homes in Tennessee has increased by 47.0% compared to the national average of 35.7%

Tennessee Metro Areas With The Hottest Housing Markets 

The state of Tennessee has seen significant growth in housing demand in recent years, consequently, prices had also gone up at a good pace.  There are some areas within the state that have outperformed others though.  We will look at the cities with the highest increase in the median price year over year. 

The top markets with the highest appreciation rate:

  1. Kingston
  2. Middle Valley
  3. Farragut
  4. Cleveland
  5. Spring Hill

Kingston

Kingston is nestled along the shore of beautiful Watts Bar Lake and surrounded by picturesque nature's beauty. It is in Roane county and 36 miles southwest of Knoxville, and 128 miles east of Nashville. As of the 2020 census, it had a population of 5,953.

The City of Kingston runs a range of recreational and leisure facilities for the benefit of its citizens and guests. Also, around Watts Bar Lake, you can have fun hiking, fishing, kayaking, and more.  

Kingston’s home prices have been doing quite well over the last few years; in fact, Kingston topped the list of cities in Tennessee with the largest increase in prices in 2022 with an increase of 60.1% from the prior year.  For 2022, October’s median price was $387,500.

In October of 2022, there were 22 homes sold in Kingston, down -18.1% from the same period in 2021.

The median days on the market in October 2022 was 59, which indicates a balanced market by today’s standards. Compared to October 2021, the median days on the market is down -18.1% compared to October 2022.

Middle Valley

Middle Valley in Hamilton County is nestled right up against the northern jut of Chattanooga's metropolitan area. As of the 2020 census, its population was 11, 695. This city is affordable while still being an affluent area. All in all, this city will be ideal for you if you want to get a lot for your money.

This city is certainly humid, though. You can expect lows of 29 degrees Fahrenheit during winter and highs of 89 degrees Fahrenheit during the summer. 

The Middle Valley Real Estate market is currently a somewhat competitive market. In October 2022, there were 25 homes sold with a median price of $371,375. The median home price in Middle Valley has increased 40.1% from October of 2021, while the number of homes sold was 25, a -13.8% decrease compared to the same month the year before.

Farragut

Farragut is home to 16 miles of greenway trails, 130 acres of parks, and plenty of shopping, dining, and entertainment options. It is located in the Knoxville Metropolitan Area. According to the 2020 census, its population was 23, 506.  

The foothills of the Great Smoky Mountains, the nine lakes region, and McGhee Tyson Airport make Farragut an ideal hub for exploring all that region has to offer.

Farragut is considered a somewhat competitive market right now. In October 2022, there were 27 homes sold with a median price of $371,375. The median price in Farragut was up 40.1% over October of 2021, while the number of homes sold was down -30.8% compared to the same period in 2021.

The median number of days on the market for October 2022 was 55 days which is up 17.0% from October of 2021.  

Cleveland

Cleveland is the county seat of Bradley County, about 30 miles northeast of Chattanooga. Its population was 47,356, according to the 2020 census. It is the sixteenth largest city in Tennessee, and its economy is based on agriculture and industry. 

Popular local recreation areas include the Cherokee National Forest, the Hiwassee River State Park, and the Lake Winnepesaukah Amusement Park.

The real estate market in Cleveland is considered somewhat competitive. There were 64 homes sold in Oct 2022, with a median price of $315,000 .The median price in Cleveland had an increase of 1.6%from Oct 2021, while the number of homes sold was down -7.2% compared to the same period last year. 

The median number of days on the market for Oct  2022 were 43 days which is up 2.4% to the same month in 2021, 

Spring Hill

The city of Spring Hill is situated in both Maury and Williamson counties. It is 30 miles south of Nashville. The population of Spring Hill was 50,005 as of 2020. According to the U.S. Census Bureau, Spring Hill is Tennessee's 4th fastest growing city.

Spring Hill combines the ustic Tennessee countryside, historic homes, and hiking trails with booming commercial development and thriving residential developments.

Spring Hill is currently a somewhat competitive. market. In Oct  2022, 100 homes were sold with a median price of $530,000. The median price in Spring Hill saw a increase of 4.0% over Oct 2021, while the number of sales was down -21.9% compared to the same month in 2021.

The median number of days on the market for Oct 2022 were 50 which is an increase of 4.0% compared to the same month last year.

Higher Mortgage Rates Could Slow Price Growth in Tennessee

How will interest rates affect the Tennessee housing market? We are already experiencing the impact of rising interest rates across the nation. Price growth in Tennessee has been flattening or on a slight decline for several months in 2022. However, Tennessee is such a high-demand destination that it may very well fare better than many other areas of the country.

As of mid-October 2022, the 30-year fixed rate mortgage is above 7% on average. That represents a 133% increase in mortgage rates in less than nine months. The Feds are on a “no holds barred” approach to curve inflation, and interest rate hikes have become the norm over the last several Fed meetings. Unfortunately, it seems that rate hikes are not done. We anticipate at least another rate increase before the year ends. 

Key Market Stats for the Tennessee Housing Market: 

As of the latest compiled housing report for October 2022.

Current ValueLast YearChange YOY
Median Sales Price$372,000$345,600up by 7.6%
Number of sales6,8559,361decrease of  -26.8%
Median Days On The Market4936up by -6.8%
Number of homes available30,47425,378increase of 20.1%
Months' supply of inventory31up by 200.0%
% of homes sold above list20.8%42.3%down by -50.8%
% of homes with price drops29.8%16.3%Up by 82.8%
New Listings82438886down by  -7.2%

Tennessee Historic price changes & affordability

The Tennessee housing market has seen explosive appreciation for years. The last 3 years have been particularly favorable to homeowners as they saw their homes appreciate by 47.0% in 36 months.   

The steep rise in home prices and mortgage rates has shrunk affordability to record lows in the state. A 47.0% spike in home prices and a sharp increase in mortgage rates in the last 12 months does not spell good news for the Tennessee Real Estate market.

We know that the average person’s wages do not increase by 47.0% in three years, so we can see why affordability is a problem. The gap between rising home prices and wages keeps getting wider.

Key Takeaways

  1. The housing market is clearly shifting, and Tennessee housing market predictions for the short term seem to be going down along with many areas of the US. Due to Tennessee’s above-average growth, some of the state’s metro areas are predicted to drop in home values.
    The next 18 to 24 months will be an adjustment, especially for home sellers and Real Estate professionals. Adjusting to a normalized market that is not heavily skewed in favor of sellers will take time.
  2. Real Estate markets are highly local and even within the same state, there will be areas that are projected to be hit hard by the market shift and others will fare better.
  3. Timing the market for buying or selling is a big gamble. If it makes sense for you to buy, go ahead and buy a home. For sellers, if you have to sell in the next 12-24 months, you may want to consider doing it sooner than later, especially if you are in an area that may be considered overvalued and has a high potential for house prices to drop.

2023 Tennessee Housing Market FAQ