Knoxville Housing Market Update: Are We Finally Balancing Out?

by Adam Kitt

🏡 Knoxville Housing Market Update: Are We Finally Balancing Out? (August – October 2025)

After several years of red-hot bidding wars and lightning-fast home sales, Knoxville’s housing market finally hit the brakes. Between August and October 2025, East Tennessee saw its first real signs of balance — not a crash, but a cooling off.

Buyers have more choices, sellers are adjusting expectations, and both sides are starting to meet somewhere in the middle. Let’s unpack what that means for you.

🔍 Market Snapshot: Cooling, Not Crashing

Between August and October, the Greater Knoxville housing market shifted from a strong seller’s market toward a balanced one

Knoxville Housing Market Data Analysis…

Here’s what stood out:

🏠 Inventory jumped 26% year-over-year — the biggest leap in nearly a decade.
💲 Median sale prices stayed elevated but wobbled:
- August 2025 → $367,583
- September 2025 → $318,950 (-4.1 % YoY)
- October 2025 → $383,000 (Knox County median)
⏱️ Homes are taking longer to sell. Average Days on Market rose to 57 days in September ( +5 days YoY ).
⚖️ Sale-to-List Ratio dipped below 98 %. Bidding-war premiums are gone.
📉 Only 14 % of homes sold above asking price, down almost 8 points from last year.
💵 Affordability is near a 40-year low, with a Housing Affordability Index around 103.
🚚 Out-of-state buyers are still coming, mostly from Los Angeles, Chicago, and D.C. — their equity continues to prop up higher-end sales.

In short: prices haven’t fallen off a cliff, but momentum has shifted. Knoxville’s market is cooling off, not collapsing.

📉 What’s Happening Behind the Numbers

The 2025 market slowdown isn’t just about interest rates — it’s about balance returning. Here’s what’s driving it:

Inventory Surge – 26 % more listings means buyers finally have options. The rush to offer over asking has faded.
Mortgage Rate Pressure – Persistent high rates continue to strain local affordability, especially for first-time buyers.
Migration Buffer – Relocators from high-cost metros (L.A., Chicago, D.C.) bring strong budgets, keeping Knoxville prices afloat.
Economic Resilience – Population growth and steady employment are keeping demand stable even as sales velocity slows.

All of this points to a market that’s normalizing — not reversing. That’s good news for the long-term health of East Tennessee real estate.

🏠 For Sellers: Precision Pricing Is Everything

If you’re listing a home right now, welcome to what I call the “Volume Correction Phase.”

The days of throwing a high price out and letting the market do the rest are over. Today’s buyers are careful, and they’ve got options.

Here’s what sellers should expect:

Price competitively from day one to avoid becoming stale.
Roughly 35 % of homes needed a price drop last quarter before selling.
Homes still get close to full price ( around 97 – 98 % of asking ), but concessions and repairs are common again.
The homes that sell fast ( 23 days to pending on average ) are those that show well and are priced right.

💡 Pro Tip: Think strategically. Position your listing to be the next home to sell — not the next one to sit.

🔑 For Buyers: Leverage Is Back on the Table

Buyers, this is your moment to breathe again. With inventory up and the frenzy fading, you can shop smart and negotiate strong.

Take your time — the average home is sitting nearly two months before selling.
Ask for repairs, credits, or seller-paid closing costs — those requests are back in play.
Explore attached options like condos and townhomes; new construction is helping relieve price pressure in this segment.
Remember: the best deals aren’t always the cheapest — they’re the homes that fit your needs and budget long term.

🧭 As your Real Estate Navigator, I’ll help you spot the hidden opportunities others miss — and guide you to your next East Tennessee home with confidence.

🏗️ The Bigger Picture: Knoxville Is Normalizing

Let’s put this in perspective. Over the past five years, we’ve seen three distinct phases:

2021 – 2023: Frenzied Seller Market — multiple offers and record prices.
2024: Plateau — stabilizing prices and slower growth.
Late 2025: Normalization — inventory and pricing are balancing out.

This isn’t bad news — it’s a healthy market reset. Local buyers are finally catching their breath, and strategic sellers can still win with proper pricing and presentation.

Knoxville continues to be one of the Southeast’s most resilient markets, thanks to our growth, affordability compared to national averages, and that East Tennessee quality of life everyone keeps discovering.