Market Pulse - July 2025

Market Pulse

JULY 2025

June home sales ticked up nearly 13% over 2024, realizing some of the pent-up demand. A promising sign, this brought the year's sales so far to a very slight 0.4% increase over the first half of 2024.

Our quarterly Market Pulse Survey revealed that member experiences closely reflect what the data is telling us: The market is still very competitive, and an inventory mismatch is causing a buildup of listings. Buyers are interested but aren't finding what they need, whether it be location, move-in ready status or price.

Buyers are also waiting in the hopes of lower interest rates. National experts debate the possibility of a fall "spring" for housing if rates fall even slightly, but this is not expected to happen until September.

In the meantime, the market continues to slowly improve and members are optimistic about the future.

Market Pulse Survey

Q2 2025

Each quarter, we survey local REALTOR® member confidence and market metrics, in reflection of the National Association of REALTORS® reporting. Our Q2 survey indicates that local members are optimistic about the future, with higher expectations for sales and market performance than 2024.

74% of respondents expect seller traffic to increase over the next few months, and 59% expect buyer traffic to increase.

The percent of first time homebuyers dropped for the second quarter in a row this year, reflecting member anecdotes about affordability challenges.

Home values are strong: The percent of appraisals that met or exceeded contract price increased to 97%, over 93% in Q2 2024.

Buyers can't find what they need, are more selective and are hesitant to spend, leaving listings on the table and causing inventory to sit on market longer than last year.

Access the survey results

Home Sales Report

JUNE 2025

East Tennessee home sales in June bounced back at a 12.9% increase from June 2024.
The median sale price was $377,700 — up 0.7% from the previous year.
Total housing inventory has increased 37.7% from the previous year.
Half of the homes sold were under contract in 20 days or less, up from 13 days a year ago.
44.4% of homes sold for the asking price or above, with 19.5% selling for more than the asking price. 8.1% sold for at least $10,000 over asking and 3.16% sold for at least $25,000 over asking price.
4.3% of sales went for more than $1 million, the highest count so far this year.
The sale-to-list price ratio held steady at 99% – up from 98.2% a year ago.
New construction was 13.5% of total home sales.

East Tennessee REALTORS® reports home sales data using a seasonally adjusted annualized rate (SAAR). This method takes into account seasonal fluctuations in the real estate market, such as increased home sales during the spring and summer, by adjusting the data to provide an annualized rate representing the projected number of homes that would be sold over a year if the current sales pace were to continue.

What's the outlook?

June home sales slowed down slightly from May, but were up 12.9% year over year. For the first time since February, the year-to-date total is also up 0.4% over 2024. This is great news for the market, showing that demand is holding steady despite affordability headwinds and higher interest rates.

Price appreciation for the past few months has been relatively flat compared to recent years, and June follows that trend with only a 1% increase in median sales price.

Generally speaking, the East Tennessee market is still tight and favors sellers. The sale-to-list ratio remains high and days on market have not increased from May.

However, many sellers are running into a challenge with disinterested buyers. New buyers looking for affordable, smaller starter homes are mostly priced out of the market; according to our Market Pulse survey, 80% of buyers are repeat purchasers who already own a home. They can afford to be flexible, and wait for the perfect listing to come along.

Inventory by county

Out of the 12 counties in the East Tennessee REALTORS® footprint, 8 marked measurable increases in active listings over the month of June. Overall, regional inventory increased month-over-month by 4%.

What's happening with rent, and how does it affect homeownership?

Rents are always tied closely to housing supply, and even more so in East Tennessee where in-migration is high and inventory is tight. Because a majority of renters are renewing contracts every 12 months and prices reflect demand, rent tells a story about the dynamics and timing of supply entering the market. Local challenges and slim inventory of attainable homes have locked many potential buyers out of the market, resulting in more pressure on our rental inventory.

For the last two years, rent in the greater Knoxville area has been relatively flat. A sharp increase in multifamily building in late 2023 and through 2024 resulted in negative rent growth, ending 2024 at a slight decline of -0.5%. Closing out Q2 of 2025, rent is up 1.6% over the first quarter but still down -0.5% from last year. Overall, we're holding steady.

Occupancy has remained tight, fluctuating between a peak of 98.9% (during the rush of 2022) and the current low of 95.6% (we've improved a bit!) which the industry would still call "high occupancy." Healthy occupancy is generally thought to be around 93-94%.

Looking at the broader picture, it may feel as though we've flooded the market with apartments over the last two years, but this amount of building can effectively be defined as catching up. In particular, one hot topic of conversation has been the rush of student housing both near the University of Tennessee campus and in South Knoxville. These units are expected to be almost immediately occupied; while the high number of completions is impressive, the market is still undersupplied.

Our analysis in the recent State of Housing report showed that rent would remain flat in 2025 if the market had delivered approximately 700 more units in 2024. That's the good news - we're close!

Brianna Paciorka/Knoxville News Sentinel

The Knoxville News Sentinel recently reported on the progress of booming student housing construction on The Strip in Knoxville. Read more here.

So how does the rental occupancy tie into homeownership? We know that many potential homeowners, who may even be financially ready to purchase a home now, are stuck in rental housing because they can't find the right inventory to fit their needs.

A NAR report in late 2024 showed that in the millennial age range alone, around 27% of the demographic in our area could financially afford to purchase a home now but are still renting. Not only does that strain local occupancy, it also drives up the price of rent. These renters are also unable to build family wealth and equity while they stay locked out of the homeownership market.

While it's tempting to lean on regulation and try to force the market to offer lower rents, there's an easier and more sustainable, future-forward approach.

How do we lower rent? Remove barriers to multifamily building AND create opportunities for homeownership.

This can look like maximizing zoning density in appropriate areas, expediting the permitting process for the desired types of housing, offering incentives for affordable development projects, targeting potential first time homebuyers with resources like financial literacy classes, or even getting creative with regional corporate partners to ensure that new residents have a plan for housing before they arrive.

Housing As Infrastructure: Federal and State Legislatures Jump In

While housing policy and supply is largely controlled on a local level, housing advocates have long argued that state and federal legislatures can and should do more to create opportunity and remove barriers. As housing becomes a hot topic, strong coalitions are taking shape across party lines to help struggling constituents.

At the recent National Association of REALTORS® (NAR) government affairs conference, hundreds of housing advocates from across the country discussed this issue. In several states, economic development organizations have successfully helped the legislature shift their thinking and see housing as a shared responsibility across government and private industry.

In North Carolina for instance, the state has worked with a laundry list of partners including the Economic Development Partnership of North Carolina and the North Carolina Housing Finance Agency to operate a trust fund that supports the creation of housing, along with local level supporting programs. Large corporations and community organizations also invest, operating affordable communities where they are most needed to spur economic development.

Just this week, the federal Senate Committee on Banking, Housing and Urban Affairs unanimously passed landmark bipartisan legislation aimed at removing barriers to housing and housing financing. Called the ROAD to Housing Act, the bill reduces development barriers and creates new opportunities for housing.

NAR strongly supported the bill and helped advocate for its passage in committee, and it will next head to the Senate for a vote.

"At a time when homeownership increasingly feels out of reach, this legislation offers meaningful, pragmatic solutions to restore opportunity for millions of American families. We commend chair Tim Scott and ranking member Elizabeth Warren for their bipartisan leadership on this critical issue and look forward to working with Congress and the administration to enact this vital legislation and help preserve the American dream of homeownership for future generations," said Shannon McGahn, Chief Advocacy Officer for NAR.

Read about the ROAD to Housing Act

More homes hit the market, but buyers aren't rushing in... yet.

Growing inventory and pent-up buyer demand may have hit its peak at the midpoint of the year. Nationally, housing inventory increased 16% month-over-month in June. The National Association of REALTORS® confidence survey indicated that real estate professionals are optimistic about an increase in activity during the second half of the year.

Read the article here.

“That confidence is supported by the fact that mortgage applications have been rising. These are serious, potential buyers. It shows a desire to enter the market has turned positive.”

– Dr. Lawrence Yun, Chief Economist at NAR

Mortgage Rate Update

According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed mortgage rate (30Y FRM) dropped slightly to 6.74% as of the week ending July 24 compared to 6.78% one year ago.

Although the Federal Reserve held rates steady at the July meeting, based on economic trends experts are predicting a possible rate cut in the fall. According to the CME FedWatch dashboard, a poll showed that 45% expect a 25 basis point reduction in September. It's possible that the expectation of the cut could affect market interest rates even before it is enacted.