Market Pulse

April 2023

Home sales in the Knoxville Area increased in March – up 8.0% from the previous month but down 8.9% from a year ago. Overall, home sales were down 17.5% in the first quarter of 2023.
Apartment rents in Knoxville were up 12.75% in the first quarter of 2023, compared to 4.46% growth nationally.
Middle-income homeowners in Knoxville accumulated $109,890 in housing wealth as their homes appreciated over the last 10 years, according to a new report from the National Association of Realtors.
Save the Date: Findings from KAAR's forthcoming 2023 State of Housing Report will be presented at a special Knox County Commission meeting on May 22nd at 4 PM in the main assembly of the City-County Building. The presentation will be followed by a discussion about policy solutions to address the region's housing needs.

Reader's Note: All real estate is local. Pay attention to local trends and be careful when you read national news as it doesn't necessarily reflect what's currently happening in East Tennessee.

Home Sales Report

Knoxville Area home sales increased in March — up 8.0% from the previous month but down 8.9% from a year ago.
Median home sales price was $325,000 in March — up 5.88% from the previous year.
Total housing inventory remains elevated – up 95% from a year ago but still well below pre-pandemic levels.
Half of the homes sold were under contract in 16 days or less, down from 25 from the previous month.
23.8% of homes sold for more than the asking price, down from 25% the previous month, with 12% selling for at least $10,000 over asking and 4% selling for at least $25,000 over asking.
New construction represented 15% of total home sales.

KAAR reports home sales patterns using a seasonally adjusted annualized rate (SAAR), an adjusted rate that takes into account typical seasonal fluctuations in data and is expressed as an annual total. Comparing month-over-month housing market data using this method provides a more accurate depiction of home sales.

What you need to know: Home price growth accelerated in March, which is likely a reflection of the drop in mortgage rates over the past few weeks. Knoxville's housing market is in the early stages of what is expected to be a prolonged recovery. Currently, there are no indications of a substantial supply surge on the horizon with new listings down 14% year-over-year in Q1 2023.

Middle-Income Homeowners in Knoxville Gained More Than $109,890 in Wealth Over the Past Decade from Home Appreciation

New data from the National Association of Realtors® reveal middle-income homeowners in Knoxville accumulated $109,890 in wealth as their homes appreciated over the last 10 years. The data, which was featured prominently in NAR’s new report, Wealth Gains by Income and Racial/Ethnic Group, speaks to the value agents and Realtors® bring to consumers when helping buy and sell homes that build generational wealth.

NAR data also showed substantial variation and inequality in wealth gains across different income and racial and ethnic groups. Low-income homeowners in Knoxville were able to build $89,120 in wealth in the last decade from home price appreciation only, while upper-income households saw an increase of $147,490.

Although Hispanic homeowners experienced the smallest wealth gains among any other racial or ethnic group in Knoxville, these owners were able to accumulate more than $120,000 in wealth in the last decade. Black homeowners gained $125,300 in wealth, Asian homeowners saw an increase of $304,230, and White homeowners experienced $128,800 in wealth gains from their home over the past 10 years.

“This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life,” said Lawrence Yun, NAR’s chief economist. “A mortgage is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”

Housing inventory was virtually unchanged over the past month. As of the end of March, active listings are down around 36% from their peak in November 2022. While approximately 100% higher than this time last year, for-sale inventory remains well below pre-pandemic levels.

The typical listing in the Knoxville area received 2.2 offers in the first quarter of 2023, down from 6.2 offers in 2022, according to KAAR's latest Market Pulse Survey. While homes aren't receiving as many offers as in the early months of 2022, multiple offer scenarios remain extremely common with half of all homes receiving at least two offers.

These dynamics help to explain why home price appreciation has begun to accelerate again after numerous months of consistent deceleration.

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Mortgage Rates Continue to Inch Up

Mortgage rates increased in recent weeks as economic uncertainty placed upward pressure on rates, according to Freddie Mac's Primary Mortgage Market Survey. The average 30-year fixed mortgage rate (30Y FRM) was 6.43% for the week ending April 27, up from 6.27% earlier in the month.

Why It Matters: Mortgage rates are still more than one percentage points higher than this time last year. As a result, the monthly P&I payment for the median listing is up more than $400 from the previous year, causing prospective home buyers and sellers alike to head to the sidelines. However, home-buying demand should rise as the spring season approaches.