Market Pulse - November 2025

Market Pulse

NOVEMBER 2025

As the Knoxville metropolitan statistical area approaches the milestone of 1 million residents, news headlines this month have highlighted the exceptionally high cost of housing, rising homelessness and expected growth.

This underlines the continuing need for action but shouldn't incite panic. Healthy economic growth sustains our region; the bulk of in-migration happened over the last 5 years and population increase has slowed to a healthier 1.1% annual increase.

There is good news in housing. October home sales in East Tennessee increased over 1.3% last month, 8.2% over last year and 4.7% year-to-date. Recent easing in mortgage rates and increased active inventory were welcome updates for homebuyers last month, opening the market to previously locked-out consumers.

For the first time since 2020, the median home sale price in October dropped 1.9% year-over year to $367,500, showing that the market is continuing to normalize.

So do we still need to take proactive steps on housing? Yes. While the market has improved slightly, it is too slow and we're still falling behind. Many existing residents are priced out of homes, both to buy and to rent. To achieve a meaningful long-term effect on home affordability will also require action to accommodate growth by incentivizing density, removing consumer barriers and investing in infrastructure.

We dive into updates on the Knox County Unified Development Ordinance below, an opportunity to make those positive changes to better prepare for the future.

Home Sales Report

OCTOBER 2025

East Tennessee home sales in October continued to improve, up 8.2% from October 2024.
The median sale price was $367,500 — down 1.9% from the previous year.
Total housing inventory has increased 19.8% from the previous year.
Half of the homes sold were under contract in 31 days or less, up from 21 days a year ago.
37.6% of homes sold for the asking price or above, with 16.8% selling for more than the asking price. 8% sold for at least $10,000 over asking and 3.5% sold for at least $25,000 over asking price.
The sale-to-list price ratio rose to 98.5% – up from 97.7% a year ago.
New construction was 12.2% 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?

Late in the year, the East Tennessee market is finally realizing some of the pent-up potential of 2025. Sales have steadily improved through the summer and fall, with the current pace on track to outperform 2024 by about a 5% increase.

For the first time since 2020, year-over-year home prices dropped in October with median sale price of $365,700. While this is only a 1.9% decrease from 2024, this is a solid sign that the market is finally leveling out after the steep increases of 2021-2023.

County by county, costs still vary widely. Out of the East Tennessee REALTORS® footprint, the highest median sale price in October was Loudon County at $539,000. Notably, this is also the county with the most restrictive land use policies, and a moratorium on development that is the subject of several lawsuits.

The lowest median sale price in our footprint was Scott County, at $161,710.

Inventory across East Tennessee has continued to improve steadily, now at the highest point in more than 5 years with 8,450 active listings.

Inventory by county

Out of the 12 counties in the East Tennessee REALTORS® footprint, 7 marked measurable increases in active listings over the month of October. Overall, regional inventory increased month-over-month by 1%.

Knox County UDO Update

As the last step of the multi-year Advance Knox planning process, Knox County has engaged a consultant to help align codes with the future plan for land use. the result will be a Unified Development Ordinance (UDO) that combines all zoning, street, subdivision, stormwater and other development codes into one comprehensive document. (Review the basics and ETNR's position here.)

In September, the county and consultant Orion Planning + Design held public meetings and an online comment period to review the findings from the initial audit of the codes. Our members participated in this process alongside community leaders, members of the general public, local professional groups and more.

As expected, the biggest priority and challenge is aligning the future land use classes with existing zoning requirements.

An excellent map is available where users can compare existing zoning and future land use classes side by side. Click here to try it.

The feedback is summarized here, along with how many votes each priority received at a second round of public meetings. Categories of feedback were compiled into these priority categories:

Community & Character

Improve the predictability and transparency of the development process
Ensure that development is sensitive to existing community character
Conserve historic and cultural resources

Land Use & Housing

Encourage infill and redevelopment of underutilized commercial land
Promote attainable housing that meets needs of current & future residents
Create neighborhoods with a variety of housing types and amenities in close proximity
Incentivize walkable, mixed-use centers, corridors and neighborhood service nodes as the preferred form of commercial development

Mobility & Connectivity

Promote connectivity with new development
Improve safety for all users
Coordinate infrastructure improvements with development
Provide alternative transportation options

Environment & Recreation

Encourage development practices that conserve and connect natural features
Create a park system that is accessible to and meets needs of all residents

The consultants are now working with county staff for 6-9 months to research and compile the first draft of the UDO, taking into account the summarized feedback.

Review UDO updates

While the county and consultants effectively engaged many stakeholder groups, we noted a lack of professional/expert participation in the feedback follow-up meetings and comment forums.

Industry professionals should actively participate in all facets of the UDO process to ensure local experts are heard, since the resulting ordinances will govern land use for years to come.

Comments are still accepted throughout the process and can be submitted here.

Budgeting for growth

As communities grow across East Tennessee, budgets are top of mind. This is not just a local problem; the great post-pandemic reshuffling and migration redistributed population to areas that were often unprepared.

Growth has upsides. East Tennessee is on an economic high, adding jobs and playing a starring role in the state's plan to shine in nuclear and energy investment. In the newly added Southeast region Michelin guide, East Tennessee has three listed restaurants.

Long-term economic success improves residents' quality of life through job opportunities, amenities like retail, medical facilities, recreational area and more. In fact, as the Knoxville MSA approaches 1 million residents, this is often the threshold for major business investments into a region.

The downsides, unfortunately, are often more immediately visible to the average resident and affect their day-to-day life. Changes like longer commutes or more traffic jams are instantly painful and result in an outpouring of concern.

Partially due to the state's famously cautious fiscal culture and legislation, county and city taxes often fall behind population growth and local government holds most of the responsibility for infrastructure.

Solving this challenge is not an easy endeavor. Seeing the need, policy experts and communities nationwide are putting their best brains on the problem, and new resources emerge almost daily.

Below is a brief summary of just a few of the tools that municipalities can use to pay for the infrastructure and development necessary to support long-term growth.

Zone-based growth tools: Municipalities can create zone-based incentives where developers build the needed infrastructure, in exchange for cost offsets such as tax increment financing. In this model, the cost of infrastructure needed now is financed by calculating the expected future revenue increase associated with the project.

Special districts: A range of options exist to designate a "district," in which special taxes are levied that are then used directly to improve that area. Downtown Knoxville is an example of a successful Special Assessment District.

Alternate revenue sources: Public-private partnerships are not a new concept, but an increasingly popular solution to fading federal funding and low tax revenues. This approach is a way to coordinate and control private donations in tandem with public funds, to close the gap that often keeps riskier projects like affordable housing from making the cut for traditional financing.

With the support of a grant from the National Association of REALTORS®, ETNR is working on a curriculum, case studies and resource list for financing growth and infrastructure. For more information or to contribute to the resources, email marketpulse@etnrealtors.com.

2026 NAR Forecast is Sunny

Last week at the Residential Economic Issues and Trends Forum during NAR NXT, The REALTOR® Experience in Houston, NAR's research team revealed their first forecast for the year to come.

The team is predicting that mortgage application gains, added supply and the continued uptick in sales will indicate a healthier 2026. Read the article here.

“Next year is really the year that we will see a measurable increase in sales." – 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) rose slightly to 6.26% as of the week ending October 30. This rate is down 0.58 points from one year ago at 6.84%.

Rates have fluctuated slightly since hitting a low of 6.17% in mid-October, overall dropping more than 0.87 in the past 12 months from January's high of 7.04%.

Partial jobs and economic data was released this week after the government shutdown for September, giving a limited outlook on how overall performance may affect the bond market and mortgage rates in December. The September jobs data was slightly better than expected, but does not include any shutdown effects so may not present a full picture.

The CME Fedwatch survey reported high confidence, around 79% as of this writing, that there will be another rate cut at the Federal Reserve's December meeting. However, lending professionals continue to caution that this may not result in further easing of mortgage rates for homebuyers.

The national Mortgage Bankers Association reported concrete evidence that the temporary drop in rates boosted affordability, with the median application payment dropping from $2,067 in September to $2,039 in October. This is also $88 lower than October 2024, which is more dramatic than it seems in context - a 4.2% decrease.

Unseasonably high sales in October can be at least partially attributed to this boost in affordability. Applications slowed during the first week of November, indicating that consumers are still extremely sensitive to rate changes.

Read the latest from the Mortgage Bankers Association