Knoxville, Tennessee Real Estate Market Review - 2025 Q1

2025 Knoxville Real Estate Market Update

The Knoxville housing market started off 2025 with a calm, steady rhythm that contrasts sharply with the volatility seen in recent years. While some metro areas are experiencing sharp corrections or dramatic swings in pricing, Knoxville is charting a more measured course — modest growth, rising inventory, and affordability challenges that mirror the broader national picture.

🏠 The Knoxville Market is Cooling — But Not Cold

In January 2025, the median home sale price in Knoxville reached $314,250 — a small, but telling 0.7% increase over the same period last year. This slight uptick signals that while the days of rapid price spikes may be behind us, demand hasn’t evaporated. It’s a market that’s cooling in pace, not collapsing in value.

On the transaction side, only 148 homes sold in January — down more than 8% from the same time in 2024. Fewer buyers are jumping in right now, but that could be more about caution than a lack of interest. Higher borrowing costs continue to reshape the buyer pool.

🧱 Inventory Gains in Knoxville Give Buyers More Leverage

The number of homes on the market climbed nearly 24% year-over-year in January, a welcome change for house hunters who have been navigating tight supply for years. This increase in available homes is giving buyers more choice and softening the competitive edge that sellers once held.

For sellers, this means a more strategic approach is necessary. Homes still move — especially those in desirable neighborhoods — but they no longer fly off the market in hours.

💸 Mortgage Rates and Affordability: Still a Roadblock for Knoxville's Housing Market

One of the biggest constraints in Knoxville’s market remains mortgage rates. As of early 2025, the average 30-year fixed rate continues to hover near 7%. That’s a far cry from the record lows of 2021 and continues to dampen buying enthusiasm, especially among first-time home buyers.

While the Federal Reserve has hinted at potential rate cuts later in the year, most buyers are still waiting for clearer signs of relief before making their move. For now, monthly payments remain higher than many would like, even with home prices leveling off.

🌄 Knoxville's Suburban Shift: The Quiet Winners

Knoxville’s surrounding communities are gaining ground as buyers look for value and space. Towns like Maryville, Hardin Valley, and Farragut are enjoying increased demand thanks to good schools, lower density, and access to nature.

Remote and hybrid work trends have allowed many buyers to cast a wider net when house hunting, and these outlying areas — once seen as a compromise — are now highly sought-after. Expect this suburban trend to continue well into the year.

🔮 What’s Next for the Knoxville Housing Market?

The remainder of 2025 is shaping up to be a year of balance for Knoxville real estate. Prices are likely to remain relatively stable, with slight growth expected in desirable pockets. If interest rates ease up, buyer activity could rebound in the second half of the year.

For buyers, the current market offers an opportunity to shop with less pressure and more inventory. For sellers, realistic pricing and presentation will be key to success.

📌 Key Q1 2025 Highlights for the Knoxville Housing Market

• Median Home Price: $314,250 (+0.7% YoY)

• Sales Volume: 148 homes sold in January (–8.1% YoY)

• Inventory: +23.8% YoY increase in active listings

• Mortgage Rates: Holding near 7%

• Suburban Growth: Strong demand in outer communities like Farragut & Maryville

Knoxville may not be grabbing headlines with soaring prices or record-breaking sales, but in many ways, that’s a good thing. The market is maturing — finding equilibrium in an economy still searching for its footing. It’s a time for strategic moves, smart investments, and long-term thinking in East Tennessee’s steadily growing hub.

How I Can Help You

When it comes time to purchase a home or refinance an existing loan, I want to help you! Hopefully articles like this give you good information and a better understanding of the mortgage world, but let me use my experience and expertise to help you with your particular situation.

I tell my clients and referral partners that a mortgage transaction starts with a simple conversation. Let’s talk about your financial situation, budget, and goals so that I can help you determine the best solution for you. During a 10-minute informal conversation, we can get you on the right path as it relates to a home purchase or mortgage refinance.