Middle Tennessee Real Estate Market Projections for 2025

As we move into 2025, The Cherished Home Group has been analyzing market trends and economic factors to forecast what buyers, sellers, and renters in Middle Tennessee can expect this year. Here’s what we’re predicting:

Housing Market Activity Will Pick Up, and Home Values Will Increase

Both Zillow and Redfin are projecting home value growth in 2025, with Zillow estimating a 2.6% increase and Redfin slightly higher at 4%. While we find these projections reasonable, the elevated interest rates we’re experiencing suggest that growth will likely moderate to a more realistic 2-3% range this year.

On a national level, home sales rose from 4.1 million in 2023 to a projected 4.3 million in 2024. For context, pre-pandemic home sales typically ranged from 5 to 5.8 million annually. One trend that will persist is homeowners with sub-3% interest rates choosing to remain in their homes, limiting available inventory. This constrained supply will likely drive home prices upward while simultaneously making homeownership challenging for many, leading more prospective buyers to rent.

Mortgage Rates Will Fluctuate but Stay Near 7%

In 2024, mortgage rates averaged around 6.8%, with periodic dips into the lower 6% range. We anticipate similar fluctuations in 2025, with rates remaining close to 7%. Economic policies, including potential tax cuts and tariffs from President-elect Donald Trump, could result in minimal rate cuts by the Federal Reserve. As such, high mortgage rates are expected to remain a key factor affecting affordability for buyers.

Homeownership Trends in Middle Tennessee

Middle Tennessee’s appeal continues to attract buyers from across the country, but higher mortgage rates and limited inventory are presenting challenges. As prices rise and interest rates remain elevated, potential buyers may explore smaller properties or move to surrounding areas where affordability is higher.

For sellers, the current market conditions present an opportunity to list properties at competitive prices. However, it’s essential to work with an experienced real estate team to navigate the complexities of the market and maximize your home’s value.

2025 Will Be a Renter’s Market

With rising home prices and persistent affordability challenges, many individuals will choose to remain renters. While the availability of rental units may improve as new construction projects are completed in the area, demand is expected to remain high. This could lead to modest increases in monthly rental costs, especially in desirable neighborhoods and growing communities. The affordability gap between renting and buying is likely to widen, making renting a more attractive option for many in 2025.

Final Thoughts

The Middle Tennessee real estate market in 2025 will be shaped by moderate home value growth, high but steady mortgage rates, and a strong rental market. Whether you’re considering buying, selling, or renting, The Cherished Home Group is here to provide expert guidance and support. Let us help you navigate the opportunities and challenges of the year ahead with confidence.