As we close out 2025 and move toward the new year, Knoxville homeowners are asking one question more than any other: “What will the housing market look like in 2026?”
- Mortgage Rates: Gradual Relief in Early 2026
- Home Prices: Knoxville Expected to Rise 3–5% in 2026
- Inventory Levels: Still Low, but Rising Slightly
- Buyer Demand: Strongest in Starter and Mid-Range Properties
- Should You Sell Before or After the New Year?
- What Sellers Should Do Now (December 2025)
- Final Takeaway: Knoxville’s 2026 Market Favors Prepared Sellers
The answer: 2026 is shaping up to be a more balanced but still favorable market for sellers—especially those who understand the trends early. This forecast breaks down where interest rates, home prices, demand, and inventory are heading based on the latest data from East Tennessee, national housing agencies, and market indicators.
Mortgage Rates: Gradual Relief in Early 2026
After two years of rate volatility, the Federal Reserve’s most recent outlook suggests a slow but steady decrease in mortgage rates as we move into the first half of 2026. The Federal Reserve’s policy projections point to easing inflation pressures, which typically leads to lower long-term rates.
For sellers, lower rates mean:
- More qualified buyers entering the market
- Higher demand in the $250,000–$500,000 price range
- Better competition for well-maintained properties
Home Prices: Knoxville Expected to Rise 3–5% in 2026
Knoxville avoided the dramatic swings seen in larger metros—and that stability continues into 2026. According to regional MLS data and national trend indicators published by the U.S. Department of Housing and Urban Development, mid-size metros with strong job growth and low inventory (like Knoxville) are projected to grow modestly next year.
2026 Knoxville Price Forecast: +3% to +5%
The strongest appreciation is expected in:
- South Knoxville
- Hardin Valley
- Fountain City
- Farragut
Properties needing repairs may appreciate more slowly. If you’re unsure whether to invest in repairs, our guide How to Sell a Knoxville Home With No Equity explains how condition affects value.
Inventory Levels: Still Low, but Rising Slightly
Knoxville inventory remains well below the national average, but new construction and more move-up buyers listing their homes are helping supply gradually increase.
Low inventory favors sellers—but not equally. Move-in-ready homes see the strongest demand, while properties with deferred maintenance may sit longer unless priced correctly.
Buyer Demand: Strongest in Starter and Mid-Range Properties
Homes under $400,000 continue to dominate buyer interest in Knoxville. Tennessee’s population growth—especially from surrounding states—remains one of the highest in the region, according to the State of Tennessee.
Expect:
- Strong demand for move-in-ready homes
- Growing interest in smaller single-family homes
- Competitive offers in high-demand neighborhoods
Should You Sell Before or After the New Year?
With rates projected to ease and prices expected to rise, early 2026 will likely bring renewed buyer energy. Listing between January and April often captures the “rate-drop momentum” as sidelined buyers re-enter the market. For more guidance, see our detailed breakdown on selling before 2026 in Knoxville.
If your property needs repairs, our repair analysis article What Puts the Most Value on Your House? may help decide where to invest before listing.
What Sellers Should Do Now (December 2025)
As the year winds down, here’s how to position yourself for the strongest sale:
- Evaluate repairs: Small updates often make a big impact.
- Check your equity: Rising values may put you in a better position than you think.
- Plan your listing timeline: Early 2026 could bring increased demand.
- Get a local value estimate: Automated online tools can be inaccurate in Knoxville’s micro-markets.
For personalized guidance, our article Knoxville Creative Financing explains flexible options if you want to sell without waiting for the traditional listing process.
Final Takeaway: Knoxville’s 2026 Market Favors Prepared Sellers
Knoxville isn’t overheating, and it isn’t crashing. It’s stabilizing—with conditions leaning toward sellers who understand their property’s true value and position themselves early.
If you want to know where your home stands heading into 2026, or if you’re considering selling without repairs, we can help you compare your options clearly.
Click here to get a personalized, private home analysis for free.
— Christopher Tate Sullivan
Real Estate Analyst & Creative Financing Specialist
Tact Prudence · Knoxville, TN
