Why is Tennessee housing so expensive? This report breaks it down.
East Tennessee Realtors shared a new Market Pulse report, highlighting findings from the Sycamore Institute.
For most people, housing is the biggest expense in their budget. Having a roof over your head is essential, but for many, the cost of housing takes up a significant portion of their income.
Since the pandemic, home prices have been on the rise. While the rate of increase has slowed, it hasn’t stopped. This steady climb in housing costs is pricing out many lifelong Tennesseans. In a report shared by East Tennessee Realtors, the Sycamore Institute breaks down how we’ve reached this point.
Housing availability is a national issue, but in Tennessee, it’s especially pressing. Our housing shortage dates back to 2006, when new construction nearly stopped due to the Great Recession. Although new homes started popping up again in the 2010s, the supply never caught up with demand—especially as more people moved to Tennessee. Now, in 2025, with an influx of high-net-worth individuals moving to the state, housing prices are at an all-time high, even in rural areas.
The Sycamore Institute report also highlights how rising home prices feel even more burdensome because wages haven’t kept pace with inflation.
According to the report, “Tennessee’s housing supply shortage mirrors that of other states but is unique in some ways, driven by migration into and within the state. As these trends slow and supply catches up, the rapid increase in housing costs is expected to ease—unless there are unforeseen events.”
Focusing on East Tennessee, home sales dropped 4.7% from January to February 2025, while the median sale price rose to $360,000, an increase of 1.8% from last year.
The market is gradually shifting away from a seller’s market. Over half of homes sold so far in 2025 went for less than the asking price, a stark contrast to the competitive environment of previous years when it was rare for homes to sell below asking. That said, a small percentage (2.7%) of homes still sold for $25,000 above asking price, showing that demand remains strong in certain areas.
Interestingly, new construction is playing an increasingly important role in the market. About 15% of homes sold this year have been newly built.
However, the biggest hurdle for the market in 2025, according to East Tennessee Realtors’ Market Pulse survey, is consumer confidence.
“The Conference Board’s Consumer Confidence Index fell in February and March, reaching its lowest point since 2021. For local residents, home-buying decisions are best guided by local economic opportunities. Despite national concerns, East Tennessee’s regional economic outlook is more positive, and consumer confidence will be key this year,” the report emphasized.
Learn more about East Tennessee Realtors.
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