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Market Pulse
OCTOBER 2025
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September home sales were healthy, improving 10.4% over September 2024. Pending sales increased 14% year over year, showing a potential for continued momentum in Q4.
Our members report in this quarter's Market Pulse Survey that national macroeconomic concerns are still one of the biggest forces weighing on consumer confidence and slowing sales. A recently released CNBC Housing Market Survey showed that 72% of real estate agents said their clients expected mortgage rates to fall further.
The Federal Reserve update this week highlighted uncertainty about a December rate cut, a lack of data due to the government shutdown, and private sector layoffs. Following the announcement (as broadly expected) of the Fed's second rate cut, mortgage rates rose by around 14 points.
Context is important; despite the widespread media characterization of current mortgage rates as "high," the weekly average 30-year mortgage rate as of this writing is 6.17%, 0.55 points lower than this time last year.
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Market Pulse Survey
Q3 2025
Each quarter, we survey local REALTOR® member confidence and market metrics, in reflection of the National Association of REALTORS® reporting. Our Q3 survey indicates that local members have seen market improvement, with every survey this year showing higher expectations for sales than 2024.
- 71% of respondents expect seller traffic to increase over the next few months, and 58% expect buyer traffic to increase.
- Members expect price growth to slow, with only 56% expecting prices to rise.
- Home values are strong: The percent of appraisals that met or exceeded contract price increased to 99%, over 96% in Q2 2024.
- Customers are hesitating due to economic concerns, and even those who are financially ready to buy are waiting for a perfect listing that checks all of their boxes. Members note that sellers need to be more realistic on pricing.
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Home Sales Report
SEPTEMBER 2025
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East Tennessee home sales in September continued to improve, up 10.4% from September 2024.
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The median sale price was $380,000 — up 3% from the previous year.
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Total housing inventory has increased 26% from the previous year.
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Half of the homes sold were under contract in 31 days or less, up from 20 days a year ago.
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37.7% of homes sold for the asking price or above, with 16.9% selling for more than the asking price. 6.7% sold for at least $10,000 over asking and 2.3% sold for at least $25,000 over asking price.
- 5.5% of homes sold for more than $1 million.
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The sale-to-list price ratio dropped very slightly to 98% – up from 97.5% a year ago.
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New construction was 13.8% 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?
The typical seasonal spikes in home sales have been flatter and more protracted this year, with sales improving in slow increments. From January to September, the total increase in sales is 4.4% over the same period in 2024. Better than previous years, but certainly not living up to the full potential of the improved market conditions that informed our initial forecast of an 8.7% increase.
Pending sales increased 14% in September, indicating that there is more activity expected in October. In contrast to national headlines about dipping sales in a softening labor market, East Tennessee continues to be a growth market and demand for housing remains high.
Inventory is at its highest point since the pandemic with more than 7,700 active listings, and affordability is improving thanks in part to lower interest rates.
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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 September. Overall, regional inventory increased month-over-month by 3%.
| | Data reveals rising number of cost-burdened households in Tennessee | |
The Sycamore Institute recently released a new data visualization tool extracting insights from the 2024 American Community Survey, shared as part of the most recent U.S. Census annual data release.
The report details the status of Tennessee residents compared to the nation on measures of housing, income, education and health.
The quantity of cost-burdened households in the state of Tennessee has steadily risen as housing costs increased since 2020, with 28.7% of all households now in that category.
The term "cost-burdened" refers to households who spend more than 30% of their monthly gross income (before taxes) on housing costs. This stretch reduces the amount of money families can spend on other necessities such as food, transportation and medical care.
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While the percentage of cost-burdened Tennesseans is slightly better than the national percentage when taken as a whole, our renters are not faring as well.
More than 50% of statewide renters are cost-burdened, compared to only 18.9% of households who own a home.
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Within the East Tennessee REALTORS® footprint, renters in our most populous county fare slightly worse than both the state and the nation. In Knox County, more than 52% of renters are cost-burdened.
However, homeowners have thrived with the influx of equity during the last 5 years of rapid home price appreciation. Only 17.2% of homeowners in Knox County are cost-burdened.
This pattern also reflects how high housing costs in more populous counties have pushed out lower-income renters and buyers alike into surrounding counties. Knox County, Anderson County and Blount County all have a higher percentage of homeowners than the state, at 66%, 73% and 74% respectively.
| | How is the government shutdown affecting the housing market? | |
Each day that the government shutdown continues, complications affect the housing industry from home buyers to construction.
Flood Insurance Lapse
The National Flood Insurance Program (NFIP) is unable to write new policies for homeowners or for home purchases that fall within the high-risk floodplain, and transactions are unable to move forward without those policies.
Existing policies remain active, currently coming to the end of the 30-day grace period on renewal. Many lenders have suspended the flood insurance requirement temporarily, but it is unsure whether this policy will be continued beyond October.
Impacts on Lending
Rural lending programs have been impacted the most by the shutdown, with USDA-backed loans on pause. Lenders have also reported delays in income verification and other IRS-based services.
Impacts on Industry Employment
E-Verify, the online system that allows businesses to determine whether applicants are eligible to work in the United States, is currently unavailable. Employers may be unable to access their accounts as part of the hiring process.
Loss for Local Economies
Beyond the direct impact on individuals, delays in transactions are part of the overall effect on local economies. NAR research shows that the median home sale generates around $125,000 of economic impact.
When the last protracted government shutdown occurred in 2013, the 9-county Knoxville metropolitan statistical area's real gross domestic output (GDP) dropped by 56% that year.
Housing Industry Calls for Continuing Resolution
The National Association of REALTORS® (NAR) is working directly with members of Congress to emphasize the importance of key services, compiling resources and sharing information. NAR joined the home builders, bankers, chambers of commerce and many other industry organizations in calling for a continuing resolution.
“NAR continues to urge Congress to pass a clean, bipartisan continuing resolution or long-term funding bill to reopen the government,” says NAR Executive Vice President and Chief Advocacy Officer Shannon McGahn. “Every day the shutdown continues, thousands of Americans face uncertainty, whether they can close on their dream home, access flood protection, or count on the economic stability that a functioning government provides. The longer the shutdown continue, the greater the strain on families, businesses and the overall economy.”
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National home sales offer mixed indicators, each market is unique
National home sales data looks flat on the surface, but the numbers are more nuanced than they appear. Existing home sales data showed a 4.1% year over year increase in September, and contract signings were up. This varies in markets across the country, with some more closely matching national trends.
Read the article here.
"Inventory has climbed to a five-year high, giving home buyers more options and room for price negotiation," Yun says. "Looking ahead, mortgage rates are trending toward three-year lows, which should further improve affordability, though the government shutdown could temporarily slow home sales activity."
– Dr. Lawrence Yun, Chief Economist at NAR
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Mortgage Rate Update
According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed mortgage rate (30Y FRM) dropped to 6.17% as of the week ending October 30 compared to 6.72% one year ago.
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At the October press conference, Federal Reserve Chair Jerome Powell announced a second cut as expected. However, he hinted that the market shouldn't automatically assume a December rate cut, saying that they were evaluating metrics and might "resume" cuts at a later date. This is partially due to a lack of data because of the government shutdown; the last data release showed slightly increasing job data, but analysts are guessing that any gain would be offset by the significant private sector layoffs announced over the last week.
Remarks also highlighted the housing market, noting that it remains "weak" and shelter costs continue to contribute to elevated inflation. For more detail, the National Home Builders Association published an in-depth recap here.
As lending professionals often caution, the Fed rate cuts do not always result in mortgage rate drops, especially when there are mixed economic indicators.
After the press conference, mortgage rates rose the next morning by about 14 points, back to levels last seen two weeks ago.
According to the Mortgage Bankers Association survey, applications increased 7.1 percent during the week leading up to the Fed announcement. This increase in activity was slightly offset by a decrease in USDA loan applications, due to the government shutdown.
| | Stay up to date with the most recent information about East Tennessee's housing market. Here's the latest from local media: | | Market Pulse is a monthly research newsletter providing a rundown of the latest housing and economic research and analysis across East Tennessee. | | Was this email forwarded to you? Subscribe here. | | | | |
