Learn more about the housing market in Tennessee

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.

Key Takeaways

1. Tennessee’s housing market is stabilizing as it enters 2026, with flat to modest price growth, rising inventory, and longer days on market signaling more balanced conditions.
2. Mortgage rates have eased from 2023 highs and are expected to decline gradually, supporting steady (but not rapid) buyer activity through 2026.
3. New construction remains above the national average, helping expand supply and temper price acceleration, though affordability challenges persist.
4. Rental affordability remains strained, especially in major metros, despite slower rent growth and increased multifamily supply.

Tennessee Housing Market Overview

Tennessee is a state in the southern United States perhaps best known for its rich cultural and musical history, particularly in Nashville, its capital city. According to data from IBISWorld, Real Estate, Rental, and Leasing was the second-highest contributor to the state’s 2025 GDP with a growth of 4%, behind only manufacturing. This suggests a notable housing market in the state that is worth exploring further.

Entering 2025, Tennessee’s housing market has transitioned away from rapid post-pandemic growth toward stabilization. Home prices across Tennessee have largely flattened year over year, while inventory levels have risen, giving buyers more options and easing some competitive pressure seen in prior years. Data from Zillow and Redfin show modest price movement and longer days on market, signaling a shift toward more balanced conditions between buyers and sellers.

Mortgage rates, though still elevated compared to pre-2020 norms, have declined from their 2023 peak near 8% and generally sit in the mid-6% range through late 2025, providing incremental relief for affordability. Looking ahead to 2026, forecasts point to gradual rate easing rather than sharp declines, suggesting Tennessee’s housing market is likely to experience steady, sustainable activity rather than another period of rapid appreciation.

Tennessee Market Trends

To understand the Tennessee real estate market, it’s important to keep up with trends. Let’s take a look at some key ones in Tennessee:

Note: These statistics are based on Redfin’s monthly housing data from November 2025.

Median Housing Price

The median price of a home in Tennessee in November 2025 was $390,600, according to Redfin’s monthly housing market data. This is an increase of 0.9% from November 2024, accurately reflecting predictions of continually increasing housing prices in the state. In Nashville, the capital city and the most populous city in the state, the median housing price was higher in November 2025 at $481,000, down only 1.9% from the previous year. It is important to remember that in any state, statewide data is pulling from a plethora of housing markets experiencing a variety of different influences and factors.

Number of Homes Sold in November 2025

6,258 homes were sold in Tennessee in November 2025, which is a slight decrease from November 2024. This number can be expected to increase in the summer months. It is important to keep in mind that nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%.

Despite this, number of home sales from the previous two years have failed to reach the same peaks that were recorded in the summers of the early 2020s.

Median Days on Market (DOM)

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer's market as sales are slower and sellers have less leverage.

The median DOM in Tennessee in November 2025 was 73 days, an increase of 12 from November 2024. This means that, on average, listings spend about two months on the market before they are purchased. A rising DOM suggests that the statewide housing market may be favoring buyers and has become slightly less competitive in the past year.

New Supply Statistics

In 2024, Tennessee continued to permit new residential construction at a rate above the national average, signaling ongoing expansion of housing inventory across the state. While permit activity has cooled from its 2021 peak when Tennessee issued 8.24 new residential permits per 1,000 residents, it remains elevated relative to many U.S. markets. This sustained level of new construction has contributed to rising inventory in 2025, which is expected to moderate price growth and improve affordability as the market moves into 2026, particularly as buyer demand stabilizes and mortgage rates gradually ease.

Property Tax Rate

According to Rocket Mortgage, the average property tax rate in Tennessee is 0.67%. This is slightly lower than the nationwide median, and Tennessee is ranked the 15th lowest rate nationwide. The average annual property tax in the state is $1,635.57. As previously mentioned, it is important to keep in mind that this statistic reflects the average of a lot of data with significant geographic and economic diversity. Tax rates are likely to vary depending on the value of a home and its location in the state.

Foreclosure Rate in Q1 of 2024

In the first quarter of 2025, one in every 7,857 homes in Tennessee had a foreclosure filing, according to ATTOM. The state ranked 33rd nationwide for foreclosure activity, with 394 total filings, reflecting a 1.03% year-over-year increase but a 4.37% quarter-over-quarter decline, indicating relatively stable foreclosure conditions compared to national trends.

Hottest Local Markets in Tennessee 

Nashville

As previously mentioned, Nashville is the most populous city in Tennessee and its capital. It is a significant space in the country for music and southern culture. Its median home price in November 2025 was above the statewide median at $461,000. The median DOM in the state is just about consistent with the statewide median at 76 days, meaning that listings spend about two months on the market before they are purchased. Some of the most popular neighborhoods in Nashville are Green Hills, Inglewood, and West Meade.

Memphis

Behind Nashville, Memphis is the second-most populous city in Tennessee. Located in the southwest corner of the state near its border with Arkansas, its median housing price in November 2025 was considerably lower than the statewide median at $185,000. Its median DOM is also lower than the statewide median at just 39 days, suggesting a relatively more competitive market that comparatively favors sellers. Some of the most popular neighborhoods in Memphis are Sea Isle Park, Central Gardens, and High Point Terrace.

Knoxville

Knoxville is a highly-populous city located farther east in the state, closer to the border it shares with North Carolina. The city’s median housing price in November 2025 was very close to the statewide median at $301,000. This is a 4.5% decrease from November 2024. The median DOM in the state, however, is lower than the state average at 49 days. This suggests that, compared to other major cities in the state, Knoxville’s housing market is relatively more competitive, both compared to more populous cities and in the state’s aggregate numbers. Some of the most popular neighborhoods in Knoxville are Fountain City, Pleasant Ridge, and Sequoyah Hills.

Economic Factors Impacting the Tennessee Housing Market

A holistic view of Tennessee’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s take a look at a few below.

Mortgage Rates

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. as we head into 2026. As previously mentioned, national averages have dipped from last fall’s record highs, and Tennessee is no different. According to Zillow, Tennessee’s current average 30-year fixed mortgage rate is down to 5.99% after approaching 7.75% at the end of 2023.

Inflation and Cost of Living

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Tennessee. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.

Population Changes and Demographics 

A changing population ca also have implications for the housing market. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Tennessee is up to 3.6%, but is still the 16th lowest rate in the country. Unemployment rates across the nation are down, suggesting economies that are thriving and bound to both create and attract potential homeowners, including in Tennessee. 

Housing Market Predictions 2026 Tennessee 

As housing markets across Tennessee have cooled from recent highs, price growth has continued but at a slower, more sustainable pace. While home values remain elevated, stabilizing mortgage rates and gradually increasing housing supply are expected to slow further price acceleration in 2026.

Likelihood of Tennessee Housing Market Crash

Though continually rising housing prices in Tennessee may seem concerning, experts have maintained that a crash is significantly unlikely. There are many reasons for this, including a healthy economy signified by low nationwide unemployment rates and the decline and stabilizing of interest rates. The market seems poised to continue appreciating, but it is unlikely to reach any significant or concerning threshold in the near future.

Forecast for the U.S. Housing Market

Now that we’ve looked at Tennessee’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years?  

The United States' current median existing-home sale price is around $415,200 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 3 months, keeping conditions constrained.

We’re currently in a seller’s market with buyers looking at continued rising house prices—although they are rising at a slower pace compared to previous years.. The same trend can be seen with renters. Housing continues to appreciate, in general.

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In 2026, he predicts that existing home sales will rise an additional 13%. Yun expects mortgage rates to stabilize at the lower end of the current 6-7% range through 2025 and 2026 as the Federal Reserve continues gradual rate cuts. There's an anticipation of a more balanced market in the coming years, with moderate price growth and a greater amount of Americans re-entering the market.

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Year-to-date single-family housing starts were down about 7.1% in 2025, whereas starts for buildings with five or more units were up roughly 14.5% Higher mortgage rates and inflation (affecting price of materials) were the main causes.

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. According to the National Association of Home Builders, approximately 74.9% of U.S. households were unable to afford a newly built median-priced home in 2025. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.

Tennessee Rental Market

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.

Renter affordability remains a challenge in Tennessee heading into 2026, even as conditions have improved slightly since the peak of the rent crisis. Nationally, the Joint Center for Housing Studies of Harvard University reported that over half of U.S. renters were cost-burdened in recent years, and Tennessee mirrors this trend, particularly in metro areas like Nashville, Knoxville, and Memphis, where housing costs rose rapidly during the pandemic.

Rental markets cooled through 2024 and 2025 as new multifamily supply came online and demand softened, but affordability pressures persist. Although rent increases have decelerated, wage growth has not fully kept pace with elevated rent levels, leaving many Tennessee renters stretched heading into 2026. As a result, affordability remains a key concern despite a more balanced rental market and slower price growth overall.

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.

This short summary leads directly into Tennessee’s current rental market. Below are just a few of the current trends for Tennessee’s rental market based on data pulled from Zillow:

Tennessee Rental Market Key Trends

• Median rent: $1,690

• Month-over-month rent change: -$10

• Year-over-year rent change: -$62

• Available rentals: 16,014

Conclusion

Tennessee’s housing market is shaped by a wide range of regional and economic factors, and high-level data alone cannot capture every local trend. Overall, however, the market entering 2026 shows clear signs of stabilization, with moderated price growth, rising inventory, and easing interest rate pressures. Buyers, sellers, and investors should continue to monitor local conditions alongside broader national trends such as mortgage rates, housing supply, and construction activity.

FAQs

Is the Tennessee housing market cooling or crashing in 2026?

The market is cooling, not crashing. Price growth has slowed, inventory has increased, and foreclosure activity remains relatively low, pointing to stabilization rather than a downturn.

Is Tennessee a buyer’s or seller’s market right now?

Statewide conditions are becoming more buyer-friendly, with higher inventory and longer days on market, though some local markets still favor sellers.

Are home prices expected to rise in Tennessee in 2026?

Yes, but modestly. Experts expect slower, more sustainable appreciation rather than rapid price increases seen earlier in the decade.

How affordable is renting in Tennessee heading into 2026?

Affordability remains a concern. While rent growth has slowed, many renters still spend more than 30% of their income on housing, especially in metro areas.

What factors should buyers and investors watch most closely?

Mortgage rates, local inventory levels, new construction activity, and regional job growth will be the most important indicators moving into 2026.