Memphis, Tennessee Real Estate Market Update - 2025 Q1

Housing affordability remains a concern for buyers in the Memphis Housing Market during 2025 quarter one.

The Memphis real estate market entered 2025 with a mix of momentum and moderation. While home values continued to edge higher, a cooling trend emerged as buyers faced tighter budgets and mortgage rates remained elevated. The first quarter revealed subtle shifts in the market’s balance, pointing toward a more stabilized — but still competitive — landscape.

🔍 Memphis Housing Market Snapshot

Home Prices Continue to Rise, Sales Ease

Average home prices in the Memphis area climbed to just over $270,000 in March 2025, reflecting nearly a 6% jump from a year ago. However, the number of homes sold dipped slightly — down 1.5% year-over-year — showing early signs of buyer hesitation. Compared to February, sales picked up over 27%, but many industry watchers see this as a seasonal rebound rather than sustained growth.

Properties Taking Longer to Sell in Memphis

Homes are sitting on the market longer than they did in 2024. The average time to sell stretched to 61 days in March, nearly 9% longer than the previous month. This suggests that while demand remains healthy, buyers are becoming more selective — and possibly more cautious — in the face of higher monthly payments.

📦 Memphis Housing Inventory and Buyer Trends

Inventory Edges Up — But Still Tight

There were just under 3,900 homes listed in March, a modest 5% increase from February. While this helped improve options for buyers, the supply remains relatively constrained. The market remains seller-favored in many neighborhoods, though the tide may slowly be turning as new listings continue to tick upward.

High Mortgage Rates Weigh on Affordability

With mortgage rates hovering right under 7%, monthly housing costs are keeping some buyers on the sidelines. Affordability remains a concern, especially for first-time buyers. January saw a nearly 10% drop in sales compared to a year earlier, highlighting how financing conditions are reshaping buyer behavior.

 

🏢 Multifamily Construction Surges in Memphis, But Demand Lags

Memphis saw a major uptick in apartment construction in Q1, with over 1,100 new units delivered — the most the city has seen in a single quarter in more than 20 years. Yet demand didn’t keep pace, with only about 200 units leased during the same period. Occupancy levels improved slightly to just under 88%, though this remains below the city’s long-term average.

Rents Tick Up Modestly in Memphis

Despite the wave of new supply, average rents rose modestly to $1,166, a 0.9% increase from Q1 2024. Landlords are likely to feel more pressure to offer concessions in coming quarters if absorption doesn’t improve.

🔮 What’s Ahead for Memphis Real Estate

The rest of 2025 is expected to bring more measured growth in home prices and further normalization in sales activity. Inventory may continue to rise gradually, helping to rebalance the market after several years of tight conditions. Mortgage rates remain a wild card — if they soften later in the year, we could see a renewed boost in demand.

The multifamily sector, however, faces a different set of challenges. The influx of new apartments will likely put downward pressure on rents unless job growth and population gains accelerate.

For buyers, sellers, and investors, Memphis remains an appealing but evolving market. Strategy and timing will be key as we move into the year’s second half.

Key Takeaways from the Memphis Housing Market:

• Home prices rose steadily in Q1, but sales volume dipped year-over-year.

• Inventory improved slightly, yet the market remains tight overall.

• Mortgage rates around 7% continue to challenge affordability.

• Multifamily saw record supply, but leasing activity lags.

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.