Knox County Housing Market Update: Where We Stand Heading into 2026
As we close out 2025 and look ahead to 2026, the Knox County and East Tennessee housing market is showing clear signs of stabilization.
After several years of rapid price appreciation and volatility, the market has entered a more balanced and sustainable phase…
Nationally and locally, the era of runaway home prices appears to be behind us. Instead, we are seeing a healthier environment defined by steadier values, improving inventory, and renewed buyer confidence as mortgage rates ease.
Mortgage Rates and Buyer Confidence Are Improving
One of the most important drivers of recent activity has been mortgage rates. Single-family home sales this fall proved highly responsive to interest rate movement. In December, the average 30-year fixed mortgage rate dropped to a two-month low of 6.18%.
When paired with wage growth in specific sectors, lower rates are beginning to restore buying power for many households. This shift helped fuel a noticeable increase in buyer activity toward the end of the year and positions the market well heading into early 2026.
Home Sales Activity Is Picking Up
Momentum is not limited to East Tennessee. In November, the National Association of REALTORS® reported the highest level of pending sales in three years nationwide. Locally, the signal was even stronger: pending sales in the East Tennessee REALTORS® MLS were up nearly 30% compared to November 2024.
For Knox County, this reflects renewed demand from both local buyers and those relocating to the region, fueled by job growth, quality of life, and relative affordability compared to many other metro areas.
The Numbers…
Home sales increased 2.6% year-over-year
Median sale price: $387,000, down 2.6% from last year
Inventory increased 16.2% year-over-year
38.7% of homes sold at or above asking price
16.8% sold above asking
5.7% sold for $10,000+ over asking
2.7% sold for $25,000+ over asking
New construction accounted for 13.6% of sales
What This Means for Homebuyers
For buyers, conditions are improving. More inventory and slightly softer prices have created better opportunities to negotiate, while lower rates have helped offset affordability challenges.
That said, demand remains strong in the most affordable price ranges—particularly between $200,000 and $350,000, where supply continues to lag housing demand. Buyers in these segments should still be prepared to move decisively when the right home becomes available.
What This Means for Sellers
For sellers, the data supports confidence, but not complacency. Homes are still selling close to list price, and nearly 40% are achieving the asking price or higher. However, pricing strategy, proper presentation, and relevant marketing strategies are more critical now than they were during the peak frenzy years.
The good news is that home values in Knox County are holding up well and are expected to remain stable into 2026.
Looking Ahead to 2026
While 2025 sales activity remained relatively flat overall, the market performed as expected, with home prices stabilizing after years of rapid growth. The traditional spring surge was muted by economic uncertainty, but a gentle rally emerged in the fall as rates declined.
Looking forward, all signs point to a stronger and more active 2026:
Price spikes from the post-pandemic era are behind us
Inventory has surpassed pre-pandemic levels
Demand remains elevated due to ongoing in-migration
Monetary policy may continue to support housing affordability
One long-term challenge remains supply, especially with affordable housing. As Knox County and the surrounding areas continue to grow and available land becomes scarcer, future solutions will likely focus on building upward rather than outward. Thoughtful density can help preserve the region’s character, improve affordability, and sustain a healthy housing market.
Bottom Line
The Knox County housing market is stable, competitive, and well-positioned for the year ahead. Whether you’re planning to buy, sell, or stay informed, 2026 is shaping up to be a year defined by opportunity rather than uncertainty.
