Tennessee Real Estate Market Update

Q2 2024: More Homes Come To Market in the Spring

Nationwide, home sales have felt the impact of housing affordability challenges brought on by persistent elevated mortgage rates. This is slowing down home sales, even though the demand for housing is there. The most recent Tennessee real estate market update for the second quarter shows this in the statistics.

Listings Increase

March reported an uptick in the available homes for sale in Tennessee, and that market trend accelerated into the second quarter. April 2024 reported 4% more new listings, followed by 6% and 8% in May and June, respectively.

Sales Activity Dives

Sales activity began the quarter with a 6% gain over last year but slowed down as May rolled around. For that month, the number of closed sales dropped almost 4%.  

But closed sales activity crashed off the cliff in June. In the wake of another Federal Reserve meeting that maintained its fiscal policy and persistent high mortgage rates, closed sales declined almost 21% year-over-year. The optimism 2024 started with clearly waned by the quarter’s end.

Housing Prices Grow

Median sales prices reached $359,000 in April 2024, a 5.5% gain from the same month last year. May stepped up to $367,000, a 4.8% gain. By June, median prices reached $378,000 for Tennessee. Despite high mortgage rates, the strong demand for Tennessee living feeds pricing growth statewide.

Even with the pricing growth, Tennessee remains an attractive market for housing affordability. The national average in Q2 2024 was $459,000.

Inventory Rises

With the number of new listings and closed sales slowing, it makes sense that the monthly supply would increase. Each month since the year began, Tennessee’s housing inventory expanded with a steady increase. April reported a 20% growth to 4.59. That market trend maintained steam into May, reaching 4.68 months, and ended the quarter with 4.79 months. The second quarter of 2024 brings Tennessee closer to balanced market conditions. June 2024 reported homes spent a median 49 days on market before sale.

If you’re looking at buying a Tennessee home, work with a local real estate agent as the Volunteer State’s many cities have different experiences at a local level. For example, some Nashville suburbs are competitive markets that rank among the hottest for fastest-growing home prices.

Q1 2024: Higher Prices Slowdown Tennessee Home Sales

Expectations were high as experts anticipated the arrival of the new year. The hope was that 2024 would usher in lower interest rates and potentially spark more home sales activity. However, the latest real estate data for Tennessee paints a different picture.

Listings Finally Rise By End of Quarter

Fewer listings are available in Tennessee, which isn’t the news home buyers want to hear. The available homes for sale in January decreased 5.3% year over year (YOY). That drop continued into February when real estate listings were down 2.3% year over year. 

Finally, Tennessee saw a ray of hope in March, as 2.3% more listings came to market.

Spring is usually a busy time of year for home sales in Tennessee. In March, more properties entered the market, anticipating more buyers are looking for the right dream home.

Sales Activity is Down

Home sales plummeted 10.8% in January, and that year-over-year slowdown in activity persisted across the quarter. February reported almost 13% fewer home sales than last year. March saw the most significant year-over-year dive in home sales. The 15.2% year-over-year nosedive seems harrowing, but the month actually had over 8,000 closings compared to February’s near 6,000. 

Median Sale Prices

Pricing increased in 2023. That trend maintained steam throughout the first quarter. January reported a median sale price of $282,299, up 8.2% year over year. At $302,228, the median sale price bumped up 10.6% in February. March median sale prices increased 7.5% to $281,696. 

Even though Tennessee’s median sale prices bounded by double digits through the quarter, the state remained an option for affordable homes. The nationwide median sale price at end of 2023 was $417,700. 

Inventory Slowly Increases

Despite fewer listings overall, each month reported gains in the month’s supply of inventory. From 3.78 to 3.94, the quarter ended with a 4.3-month supply of inventory. Balance is considered six months.

Despite a decrease in overall listings, monthly gains in inventory supply were reported. Starting at 3.78 and rising to 3.94, the quarter concluded with a 4.3-month supply. A balanced market typically maintains a six-month supply.

Tennessee Year-End Report 2023: Inventory Keeps Drawing Back

Tennessee’s year in real estate ended by continuing the trends from earlier months: fewer homes for sale but fewer buyers, too. The late fall months saw mortgage rates reach new highs nationwide, causing even more buyers and homeowners to pause their plans to sell or buy. Here is a month-to-month Tennessee housing market overview on 2024’s last months. 

October 2023

October 2023 saw the months’ supply of inventory increase by 18.5% year-over-year (YOY) to 4.14 months. The reduced buyer pool, as mortgage rates hit multi-decade highs by the end of the month, contributed to that. 

Higher rates caused closed sales to drop 11% statewide. However, new listings were also down by 8.5%, contributing to the drawback in sales activity. Meanwhile, the price of homes did keep climbing, now at a median $284,301. 

November 2023

As sales and listings continued their downward YOY march, the months’ supply of inventory shrank in November. Still, the month’s available homes for sale was almost 20% more than the year before. Median prices were less than the prior month, at $278,947, but up 5.5% YOY. 

December 2023

To close out the year, December 2023 reported a median sale price increase of 5.7% to $283,973. While total closed sales dropped almost 17% YOY, the month’s supply of inventory was at its lowest for the quarter–3.61. Even though the available inventory was less, that figure was up 19.6% for the year-over-year comparison. 

New listings are still trending downward, which sets up January 2024 for a further possible reduction in sales activity and months of supply.

The stage for 2024 

Three Tennessee cities were named in a WalletHub analysis as some of the 2023’s best housing markets. Nashville dominated the large city real estate market as no. 1, while Knoxville was no. 22 for midsize cities. Murfreesboro ranked no. 4 for small cities nationwide. Memphis was no. 152 of the 300 evaluated markets. 

These metrics look at factors like the housing market median pricing, economic strength, and home value growth. Being ranked so highly in all three population demographics shows Tennessee real estate continues to be a good deal compared to national markets. 

Real estate can be highly cyclical, especially on the local level. Overall, it will take more homes coming to the market to address the slower sales activity, increase the supply of homes, and assist with pricing stabilization statewide. 

Summer 2023: More homes came to market, but sales activity stayed low

Now that fall weather has arrived, how did Tennessee’s real estate market fare over this turbulent summer? On a statewide level, the trends were clear: people want to live in the Volunteer State, but greater economic and supply factors are dampening sales activity. Take a look at how residential real estate sales performed month-to-month.

June 2023

Home sales in Tennessee started the summer with a 3.6-month supply of inventory. Most experts consider six months’ supply a balanced market; with fewer homes, the state was in a seller’s market. Inventory is rising, as the 3.6-month supply was almost 8% more for the year.

But sales activity stayed down by 27.4% year-over-year (YOY). That coincided with total listings also being lower by 14.4%. Even though listings and closed sales were down, the interest in Tennessee real estate remained, resulting in a 5.1% median price growth to $292,818.

July 2023

The inventory continued growing in July, with the state reaching a 3.79-month supply of inventory. That was 8.5% more than July 2022. However, sales activity remains down, as does the number of listings. Closed sales dropped by 24% YOY, while new listings were 15% less YOY.

Median home sale prices continue to rise, reaching $291,878, a 4.3% increase year-over-year but a slight drop from June’s prices.

August 2023

To finish out the summer, Tennessee continued increasing its amount of inventory. Within almost 10% year-over-year change, the state now had a 3.95-month supply of inventory. Sales activity seemed to increase slightly, but that’s only indicated because the total number of closed sales was only about 18% less than August 2022 versus the 20+ percentage point drops reported the prior two months. The total number of listings remains much less than last year and, in this case, about 14%.

If you look month-to-month, median home prices were still on a downward trend but are above last year’s prices. August home buyers paid a median of $289,170. However, do not mistake the lower prices as a sign of a housing market crash. Real estate cycles throughout the year, with spring home buying usually more brisk than the late summer and fall months.

The set-up for fall

As there is a delay between data release and current market updates, we know the real estate market is heading for more challenges. Summer saw month-to-month gains in the number of homes available for sale; that is likely to increase as interest rates climb closer to 8%, a figure not reported in over two decades. Greater economic conditions will challenge home buyers. 

Individual markets, like Nashville and Northeast Tennessee, still report high demand for homes. If sales activity is down, that’s partly because there aren’t enough homes listed for sale. That’s why year-over-year prices continue growing. However, market conditions have started to temper sales price growth. It will be interesting to see how that plays out in Tennessee over the fall.