East TN Realtors shares 2025 housing forecast, and there’s some good news
For the first time in a long time, reports show the housing crisis in East Tennessee is letting up.
East Tennessee’s housing market is expected to see a positive shift in 2025 after several years of challenges, including a prolonged inventory crunch and slow recovery throughout 2024. While the market will likely experience slower home price growth, analysts from East Tennessee Realtors predict an uptick in annual home sales. The organization released the 2025 Housing Forecast to explain what home buyers can expect.
According to the report, this anticipated growth can be credited to several key factors, including increasing housing inventory and rising consumer confidence despite flat mortgage rates. Additionally, the region’s ongoing economic and population growth is contributing to a more optimistic housing outlook.
However, challenges remain. Low inventory continues to be a significant obstacle, placing pressure on affordability. Although multi-family housing construction has increased in some counties, helping ease home prices slightly, new single-family home construction has not kept up with demand. As a result, the housing market will continue to feel the effects of the supply-demand imbalance, which will likely temper sales growth.
While population growth in East Tennessee has created additional demand, it has also spurred wage and employment growth, as well as shifting household demographics, all of which have helped reinvigorate the housing market. In 2025, home prices are expected to grow modestly by 2.9 percent annually, and total home sales are forecasted to rise by 8.7 percent from the previous year.
Over the past three years, the housing market has seen a rollercoaster of sales trends. In 2022, year-over-year home sales plummeted by 9 percent, followed by an even steeper 15 percent drop in 2023. However, the market began to recover in 2024, with a slight 1.8 percent growth in sales.
Looking ahead, apartment rent growth is projected to hold steady at 3.5 percent in 2025, continuing the stabilization that began in late 2024, when rent prices increased just 0.5 percent from the previous year.
Mortgage rates, a crucial element in the housing market equation, will play a significant role in determining market activity in 2025. After reaching their highest levels in over two decades in 2023, mortgage rates dropped slightly to an average of 6.76 percent in 2024, according to. However, in the early weeks of 2025, rates have inched up to 6.87 percent. East Tennessee Realtors predicts that rates could drop to 6 percent by the end of the year.
The “lock-in effect,” which has kept some homeowners from selling due to high mortgage rates, is expected to weaken in 2025, potentially freeing up more homes for sale. The trajectory of mortgage rates will be a key factor in determining the overall health of the market, with any further decreases likely to boost homebuyer demand.
While challenges like low inventory persist, East Tennessee’s housing market is poised for a healthier 2025, with moderate home price growth and an increase in overall sales. The combination of economic strength, population growth, and improving market conditions signals a brighter future for the region’s housing landscape.
Learn more about East Tennessee Realtors.
Like what you've read?
Forward to a friend!