Tennessee’s housing market showed resilient but uneven momentum in the third quarter of 2025, with home prices continuing to rise, construction permits showing renewed quarterly strength, and some metros experiencing a blend of growth and cooling signals, according to the latest statewide report from Middle Tennessee State University.
Murat Arik, director of the MTSU Business and Economic Research Center in the Jones College of Business and author of the report, noted the third quarter housing market “reflected stability as demand persisted across many parts of the state, despite ongoing affordability pressures and mixed performance across metro areas.”
Home prices up overall, though drops in multiple MSAs
Home prices across Tennessee increased by 0.7% for the quarter, slightly outpacing the national quarterly gain. The statewide increase underscored continued, though moderating, demand for housing, the report notes. Market performance, however, varied widely by Metropolitan Statistical Area, or MSA.
• The Cleveland MSA recorded the strongest quarterly price growth at 2.8%, followed by Knoxville, up 1.9%. Clarksville saw a more moderate rise of 1.13%, while Chattanooga remained essentially flat with a 0.12% increase.
• Six MSAs experienced price declines during the quarter. Johnson City remained stable with a marginal 0.03% dip, while Jackson, Kingsport–Bristol, and Nashville each saw declines of roughly 0.3%. The largest decreases occurred in Morristown (–0.6%) and Memphis (–1.4%), signaling softening conditions in those markets.
• On an annual basis, home prices rose 3.53% statewide, slightly above the national yearly increase. All Tennessee MSAs posted year-over-year gains, with the largest upticks occurring in East Tennessee markets such as Johnson City, Knoxville, and Morristown.
Permits rebound quarterly after annual declines
After two consecutive quarters of decline, Tennessee’s construction permit activity strengthened in the third quarter of 2025.
• Single‑family permits increased by 0.7% quarterly, sharply contrasting continuing declines across the South (–1.65%) and the nation (–1.66%).
• Multifamily permits showed even stronger momentum, rising 4% over the quarter — again in contrast to regional and national decreases. The quarterly rebound suggests a renewed push by builders to respond to ongoing demand, particularly in markets with constrained inventory.
However, year-over-year comparisons painted a different picture. Total permits across the state fell roughly 9%, driven by a 5% decline in single‑family activity and a sharper 18% drop in multifamily permits. Nationally, multifamily permits increased year‑over‑year, underscoring Tennessee’s comparatively softer long‑term construction trends.
Regional markets mixed across major metros
Major metropolitan areas posted varied results in the third quarter of 2025:
- Nashville saw home closings rise roughly 4%, while inventory declined slightly during the quarter but remained more than 21% higher than last year.
- Memphis experienced a 4.6% decline in home closings, a sign of cooling demand. Inventory saw a slight quarterly decrease but remained elevated year‑over year.
- Knoxville recorded strong closings growth of 5.7%, with inventory dipping modestly during the quarter yet remaining more than 31% above 2024 levels.
Across all three regions, elevated inventory suggested improving buyer options compared with the tight markets of prior years.
See the full report and more detailed breakdowns, including employment data, at https://www.mtsu.edu/berc/housing/.