0:00 — Introduction 0:18 — East Tennessee Market Big Picture 2:36 — Interest Rates & Consumer Confidence 15:11 — Knox County Housing Market Breakdown 19:04 — Farragut, TN Housing Market Breakdown 21:29 — Blount County Housing Market Breakdown 23:55 — Loudon County Housing Market Breakdown 26:04 — Tellico Village Housing Market Breakdown 28:57 — Anderson County Housing Market Breakdown 31:19 — Roane County Housing Market Breakdown 34:02 — Lenoir City, TN Housing Market Breakdown 35:50 — Sevier County Housing Market Breakdown 39:04 — Inventory Comparison by County 40:21 — Price Comparison by County 40:58 — YTD Price Change by County 41:38 — Days on the Market Comparison 42:07 — 6 Trends That Define this Market 49:16 — Predictions, Forecast, and What To Watch 53:17 — Why 8 Out of 9 Markets Still Favor Sellers 54:15 — What This Means for Home Sellers 54:40 — What This Means for Home Buyers 55:13 — What This Means for the Market as a Whole 55:36 — Final Takeaways & What to Watch Next Month
Executive Summary
East Tennessee’s housing market enters Q4 2026 in a state of durable tension: structurally tight supply continues to support sellers across most of the region even as macroeconomic headwinds mount to levels that would normally bring a housing market to its knees. Mortgage rates have surged to 7.63%, the 10-year Treasury yield has breached 5.30%, consumer sentiment has cratered to 48.1, oil has eclipsed $100 per barrel, and the Federal Reserve just raised rates again with at least one more hike telegraphed before year-end. In any normal housing cycle, this combination would produce rapid price corrections and a swift shift to buyer’s market conditions.
That is not what is happening in East Tennessee — at least not in eight of nine markets tracked.
The region’s absorption rates tell the story. Farragut (2.66 months), Tellico Village (2.88), Knox County (3.15), Roane County (3.33), Blount County (3.37), Anderson County (3.41), Loudon County (3.46), and Lenoir City (3.66) all sit below the 4.0-month threshold that traditionally defines a seller’s market. The sole exception is Sevier County, where 8.83 months of supply places it deep in buyer’s territory — a market weighed down by short-term rental conversion inventory and the most pronounced price correction in the region.
The central question facing every buyer and seller in East Tennessee is this: Can the region’s supply-constrained fundamentals continue to insulate it from the gravitational pull of 7.63% mortgage rates? The data suggests the answer is yes — for now — but with visible cracks forming. Knox County’s absorption rate has climbed from 2.45 to 3.15 over seven months. Blount County has risen from 2.61 to 3.37 over the same period. Days on market are expanding across most markets. Median sale prices are flat to slightly positive in most areas, a marked deceleration from the double-digit gains of 2021–2023.
East Tennessee’s housing market is not breaking. But it is bending — slowly, unevenly, and with significant variation from market to market. The pages that follow break down exactly where, how, and why.
Macroeconomic Context
The Rate Environment: A Mortgage Market Under Siege
The 30-year fixed mortgage rate reached 7.63% as of October 7, 2026, a sharp escalation from the 7.03% level recorded in late September. This increase was driven by a convergence of factors: the Federal Reserve’s September decision to raise the federal funds rate by 25 basis points to a target range of 3.75–4.00%, persistent inflation readings that have eroded expectations of near-term rate cuts, and a 10-year Treasury yield that has climbed to 5.32% — reflecting market belief that rates will remain elevated for an extended period.
To frame what 7.63% means for affordability: a buyer purchasing a $400,000 home (roughly the Knox County median) with 20% down and a 30-year fixed mortgage faces a monthly principal and interest payment of approximately $2,276. At the 3.0% rates available in early 2021, that same payment would have been $1,349. The buyer’s purchasing power has been reduced by approximately 41% in less than five years — a historically unprecedented compression. At the Farragut median of $712,206, the monthly P&I on a 20%-down conventional loan exceeds $4,050, pushing deep into jumbo territory given the conforming loan limit of $832,750. Farragut, Tellico Village, and segments of Loudon County increasingly require either jumbo financing or substantial down payments, which narrows the buyer pool to higher-income households and cash-rich relocators.
The Federal Reserve’s September dot plot signaled at least one additional 25 basis point hike before year-end, which would bring the target range to 4.00–4.25%. Officials emphasized data dependency, meaning upcoming CPI and employment reports will determine whether the Fed follows through. However, given that headline CPI remains at 3.4% year-over-year and Core PCE sits at 3.01% — both meaningfully above the 2.0% target — the probability of a dovish pivot before mid-2027 appears low.
For East Tennessee’s housing markets, the implication is clear: mortgage rates at or above 7.5% are not a temporary spike. They are the operating environment for at least the next two to three quarters, and possibly longer. Every buyer calculation, seller pricing decision, and builder strategy must account for this reality.
Inflation: Sticky, Oil-Driven, and Complicating Everything
Headline CPI at 3.4% year-over-year continues to run well above the Fed’s comfort zone, and the trend has worsened slightly in late Q3. The primary culprits are housing costs (which remain embedded in the CPI calculation with a significant lag) and energy prices, which have spiked dramatically due to geopolitical conflict.
Brent crude oil has risen to approximately $101.51 per barrel and WTI to $90.25, driven primarily by escalating tensions involving Iran in the Middle East. Oil above $100 creates a cascade effect that touches East Tennessee directly: higher gas prices reduce disposable income for prospective homebuyers, increase construction material transportation costs, raise heating costs for homeowners (relevant as the region enters winter), and — most critically for the housing market — put upward pressure on headline inflation, which in turn reinforces the Federal Reserve’s hawkish posture. The feedback loop is pernicious: geopolitical risk drives oil prices, which drives inflation, which drives the Fed to maintain or increase rates, which drives mortgage costs higher. Until oil prices moderate or inflation falls meaningfully, this loop will continue to constrain housing affordability.
Consumer Confidence: A Warning Light
The University of Michigan Consumer Sentiment Index plunged to 48.1, a level that signals deep consumer unease. To put this in perspective, the index’s long-run average is approximately 85. Readings below 60 are historically associated with periods of significant economic stress, and 48.1 indicates that consumers are in a state of active pessimism about their financial futures.
For housing, consumer confidence matters because buying a home is the single largest financial commitment most households will ever make. When consumers feel pessimistic about the economy, they delay discretionary purchases — and while shelter is a necessity, the decision to buy rather than rent, or to upgrade rather than stay, is fundamentally discretionary. The 48.1 reading suggests that marginal buyers — those who could buy but haven’t yet committed — are increasingly likely to wait. This doesn’t show up immediately in closed sales data (which reflects decisions made 30–60 days ago), but it will begin to manifest in pending sales and new contract activity over the next one to two quarters.
However, consumer confidence measures national sentiment. East Tennessee’s local economic conditions are meaningfully stronger than the national picture. The Knoxville MSA unemployment rate of 3.2% sits a full percentage point below the national 4.2%, indicating robust local labor demand. The region continues to benefit from in-migration, university-anchored employment (University of Tennessee), healthcare sector growth, and the broader economic diversification that has insulated Knoxville from the worst effects of national downturns historically. Local confidence may not mirror the national figure.
GDP and Employment: Not in Recession, But Slowing
GDP grew at an annualized rate of 2.2% in Q2 2026 — positive, but below the long-run average of approximately 2.5% and well below the robust readings of late 2023 and early 2024. The economy is not in recession, but it is decelerating, and the combination of elevated rates, expensive energy, and weakening consumer confidence raises the risk that Q3 and Q4 readings could soften further.
The national unemployment rate of 4.2% remains historically low but has drifted upward from the sub-3.5% levels of 2022–2023. In East Tennessee, the 3.2% MSA rate continues to signal a tight labor market, which supports both housing demand (employed people buy homes) and wage growth (which partially offsets higher borrowing costs). The local employment picture is one of the primary reasons East Tennessee’s housing market has outperformed what the rate environment alone would predict.
Construction: Building Less, Incentivizing More
National housing starts declined 2.6% month-over-month to a seasonally adjusted annual rate of 1.275 million units. Single-family starts rose modestly (+7.6%), while multi-family starts contracted sharply (-22.5%), reflecting developer caution in the apartment sector where vacancy rates have risen. In the South, starts edged down 1.3%.
The more relevant data point for East Tennessee is the behavior of regional homebuilders, who are increasingly offering price cuts and mortgage rate buydowns to move inventory. A 2-1 buydown on a $400,000 home at 7.63% reduces the first-year rate to approximately 5.63% and the second-year rate to approximately 6.63%, returning to the full 7.63% in year three. These incentives are effectively a price reduction that doesn’t show up in the median sale price data but does affect the builder’s net proceeds. In markets like Knox County and Blount County, where builders are active in the $300K–$500K range, buydown incentives are now a standard feature of the competitive landscape — and they are one reason pending sales have held up better than rate levels alone would suggest.
The Conforming Loan Limit and Its Local Impact
The FHFA conforming loan limit of $832,750 is directly relevant to several East Tennessee markets. In Farragut, where the average sale price is $830,470 and the average list price for actives is $943,996, a significant share of transactions now require jumbo financing or larger down payments to stay within conforming limits. Tellico Village, with an average sale price of $771,134 and an average active list price of $822,051, faces a similar dynamic. Loudon County’s average sale price of $683,229 remains comfortably below the limit, but its upper-tier homes (which represent a growing share of inventory) increasingly bump against it. For Knox County ($516,726 average sale price) and the more affordable markets, the conforming limit is not yet a binding constraint for the typical transaction, but it is for the luxury segments within those markets.
The practical effect is a bifurcation of the buyer pool: below the conforming limit, buyers have access to the full range of conventional, FHA, and VA financing products. Above it, they need either jumbo loans (which carry their own qualifying standards and often higher rates) or substantial cash. This helps explain why markets like Farragut and Tellico Village can maintain very low absorption rates despite high price points — their buyer pools are disproportionately composed of cash-equipped retirees, relocators from higher-cost markets, and high-income professionals who are less rate-sensitive.
Sevier County: STR Regulation as a Market Force
Sevier County’s short-term rental regulatory environment continues to evolve in ways that directly affect the housing market. The mandatory STRU permit program ($250 annual fee), annual life-safety inspections, and the three-strikes enforcement policy under T.C.A. 13-7-604 have not created a hard cap on STR supply, but they have meaningfully increased the cost and complexity of operating a short-term rental. Combined with a lodging tax burden of up to 15.75% (state, county, and city combined), the economics of marginal STR investments have deteriorated.
The result is a two-stage supply effect. First, some existing STR operators — particularly those who purchased properties at peak 2021–2023 pricing with aggressive revenue assumptions — are exiting the market, converting their units back to traditional sales. This adds inventory and contributes to Sevier County’s 8.83-month supply. Second, new STR investors are entering more cautiously, reducing the speculative demand that once competed with traditional homebuyers. The net effect is downward pressure on prices and elevated inventory relative to owner-occupant demand.
Property Tax Reassessments
Property tax reassessments across Knox and Sevier counties reflect higher assessed home values — a lagging recognition of the appreciation that occurred from 2020 through 2024. While reassessments don’t directly affect transaction-level market data, they increase the carrying cost of homeownership and may influence both seller timing decisions (some owners may sell to lock in gains before carrying costs rise further) and buyer affordability calculations (higher monthly tax escrow reduces the loan amount a buyer can qualify for at a given income level).
Market-by-Market Analysis
Knox County
Knox County’s September data reveals a market that is performing better than the macroeconomic environment would suggest, but with unmistakable signs of gradual loosening. Closed sales totaled 598, up 2.2% from 585 in September 2025. Pending sales came in at 588, up 5.6% year-over-year — a forward indicator that suggests Q4 closings should remain stable. In a 7.63% rate environment with consumer confidence at 48.1, the fact that pending contracts increased year-over-year speaks to the resilience of local demand, driven by the Knoxville MSA’s 3.2% unemployment rate and continued in-migration.
The absorption rate rose to 3.15 months, the highest reading since October 2025 and a continuation of the steady climb from the February 2026 low of 2.45 months. Active listings reached 2,007, up 5.5% from 1,895 a year ago. New listings totaled 832, also up 5.6%. The inventory build is real but measured — not the avalanche of supply that would signal a market in distress, but rather a slow normalization from the extreme scarcity of 2022–2024.
Pricing reflects a market in equilibrium under duress. The median sale price of $402,050 was essentially flat compared to $405,000 last September (-0.73%). The YTD median sits at exactly $400,000 — identical to 2025’s YTD figure. In the context of 7.63% mortgage rates, flat pricing is arguably a bullish outcome: it means the supply-demand balance is tight enough to prevent price erosion even as affordability deteriorates. The average sale price of $516,726, up 6.2%, tells a different story — one of strength in upper-tier transactions pulling the average above the median. Builder incentives, including rate buydowns, are helping to sustain volume in the $300K–$450K new construction segment, effectively subsidizing the effective rate for buyers and supporting both transaction counts and pricing in that range.
The sale-to-original-list-price ratio of 95.1% reveals that initial pricing optimism is being tempered by reality. Sellers who list aggressively are making concessions, but the sale-to-list-price ratio of 98.0% indicates that after price adjustments, homes sell close to their final asking price. The message for sellers: price it right from the start. Average CDOM of 53 days and median CDOM of 26 days (up from 22) show the market is functional but not frenzied.
The 12-month absorption rate trajectory is Knox County’s most important data series. From 2.45 in February to 2.48, 2.77, 2.78, 2.86, 2.94, 3.06, and now 3.15 — the progression is orderly and directionally clear. If this pace continues, Knox County would approach 4.0 months by late Q1 2027, which would represent a shift from seller’s market to balanced conditions. Whether that happens depends heavily on the mortgage rate trajectory. If rates remain at or above 7.5% through spring 2027, the combination of eroding affordability and rising inventory could push Knox County past the 4.0 threshold. If rates moderate even modestly — say, to the mid-6% range — pent-up demand could reignite and reverse the loosening trend.
Knox County Luxury Market ($750,000+). The luxury segment outperformed in September, with approximately 72 closings at $750,000 and above compared to roughly 56 a year ago — a 29% increase. The $800K–$899K range was particularly active with 24 closings versus 13 last year. YTD luxury sales at $750K+ total approximately 613 versus 448 (+37%). This strength directly reflects the composition of the luxury buyer pool: higher-income households and cash buyers who are less sensitive to mortgage rates. Active luxury listings ($750K+) of roughly 357 versus 249 last year (+43%) indicate the pipeline is expanding, but absorption has so far kept pace. The conforming loan limit of $832,750 means that a growing share of these transactions involves jumbo financing, which adds a qualifying hurdle but has not yet constrained volume.
Farragut
Farragut continues to operate as the tightest, fastest-moving market in the region, and the macroeconomic headwinds have done remarkably little to change that. The absorption rate of 2.66 months is down 21.5% from 3.39 a year ago, meaning the market has actually gotten more competitive despite mortgage rates climbing from roughly 6.5% to 7.63% over the same period.
The explanation lies in Farragut’s buyer demographics. This is a market dominated by move-up buyers with substantial equity in existing homes, dual-income professional households affiliated with major employers (UT, Covenant Health, TVA, and the region’s professional services sector), and out-of-state relocators from higher-cost metros who perceive Farragut pricing as a value. Many of these buyers have the financial resources to absorb a 7.63% rate, or they are purchasing with significant cash components that reduce their rate sensitivity. The conforming loan limit of $832,750 is binding for a meaningful share of Farragut transactions — the average active list price is $943,996 — but the buyer pool has adapted through larger down payments and cash purchases rather than walking away.
Closed sales of 32 were down 13.5% from 37, but this reflects constrained supply rather than weak demand. Active listings of 118 are down 10.6% from 132, and new listings of 42 are down 6.7%. Pending sales of 39 declined 7.1% from 42. Simply put, there aren’t enough homes listed for sale in Farragut to support higher transaction volumes.
The median sale price of $712,206 dipped 2.3% from $729,000, but the YTD median of $719,900 is up 2.3% from $703,450. The average sale price rose 6.1% to $830,470. Median CDOM of just 15 days — down from 18 — makes Farragut the fastest-selling market in East Tennessee by a significant margin. At that pace, a correctly priced Farragut home goes under contract before many buyers have even scheduled their second showing.
The sale-to-list-price ratio of 98.1% and sale-to-original-list-price ratio of 96.4% are the strongest in the region. Farragut sellers are achieving closer to their asking prices than sellers anywhere else in East Tennessee — a direct consequence of constrained supply meeting affluent demand.
Farragut Luxury Market ($1,000,000+). YTD, 73 homes have sold at or above $1 million versus 64 last year (+14.1%). The $1.1M–$1.2M range leads with 22 sales versus 17. Active listings of 41 properties at $1M+ (versus 28 last year) show expanding inventory, but the market continues to absorb it. This segment is almost entirely insulated from mortgage rate pressure — many transactions involve substantial cash or all-cash purchases.
Blount County
Blount County’s September illustrates the challenge of interpreting market data when headline numbers diverge from underlying reality. The average sale price surged 18.1% to $543,101 — the largest average-price increase in the region — but this was driven by a small number of ultra-high-end transactions, including closings above $3.75M and $4.75M that had no comparable activity a year ago. The median sale price, which better represents the typical buyer’s experience, rose a more modest 2.8% to $400,900. The YTD median of $400,125 versus $390,000 (+2.6%) confirms steady, unspectacular appreciation in the core of the market.
Closed sales of 163 declined 5.2% from 172, but pending sales of 166 rose 6.4% — a positive forward signal suggesting October closings could improve. The absorption rate of 3.37 months was nearly unchanged from 3.34 a year ago, but the 12-month trend mirrors Knox County: after bottoming at 2.61 in February, the rate has climbed every month through September. Active listings of 576 were flat year-over-year, and new listings of 218 were up 2.8%.
Days on market is where Blount County’s data raises the most concern. Average CDOM rose 28.3% to 68 days, and median CDOM increased 26.3% to 24 days. These are the most pronounced CDOM increases in the region after Anderson County and suggest that the rate environment is having a tangible impact on buyer decision-making. At 7.63%, a buyer at the Blount County median of $400,900 faces approximately $2,282 per month in P&I on a 20%-down loan — a figure that strains affordability at the median household income level. Builder rate buydowns are likely supporting volume in the new construction segment, but resale properties are sitting longer.
YTD, Blount County has posted 1,551 closed sales versus 1,619 (-4.2%) and 1,629 pending versus 1,665 (-2.2%). Transaction volume is slightly below last year’s pace, consistent with the affordability headwinds created by the rate environment.
Loudon County
Loudon County is undergoing a structural tightening that stands out in the current environment. The absorption rate dropped to 3.46 months from 4.33 a year ago (-20.1%), active listings fell 14.9% from 403 to 343, and new listings declined 10.6% from 142 to 127. In a market where mortgage rates have climbed nearly a full percentage point year-over-year, inventory shrinkage of this magnitude is remarkable.
The explanation is multifaceted. Loudon County encompasses Tellico Village and the lakefront corridors that attract retirees and second-home buyers — populations with higher cash reserves and lower rate sensitivity. It also benefits from spillover demand as Knox County and Farragut buyers seek relative value. The median sale price of $600,000, while up 3.9%, still sits below Farragut’s $712,206 and offers amenity-rich lakefront living that commands a premium over the suburban alternatives.
Closed sales of 100 were nearly flat at -2.0%, and pending sales of 96 edged down 1.0%. The market isn’t surging in volume; it’s tightening because supply is contracting faster than demand. The average sale price jumped 15.3% to $683,229, inflated by several closings in the $1.6M–$2.5M range. Median CDOM fell from 36 to 28 days (-22.2%), indicating faster absorption.
YTD, Loudon County has posted 910 closed sales versus 867 (+5.0%) and 971 pending versus 917 (+5.9%). The YTD absorption rate of 3.60 versus 4.44 (-18.9%) confirms the tightening is not a one-month anomaly. Loudon County shifted from near-balanced conditions to a clear seller’s market over the course of 2026, driven primarily by the supply side of the equation.
The conforming loan limit of $832,750 is increasingly relevant in Loudon County as average prices push toward the $700K range. Buyers in the upper half of the market are navigating jumbo financing requirements, which adds friction but has not materially slowed transactions given the buyer demographics.
Tellico Village
Tellico Village’s transformation is the single most compelling market story in East Tennessee in 2026. The absorption rate has fallen from 5.12 months in September 2025 — which placed it in near-balanced territory — to 2.88 months in September 2026, a 43.8% decline that makes it the second-tightest market in the region behind only Farragut. The 12-month trajectory tells the story: 4.62 (Oct ’25), 4.51 (Nov), 3.85 (Dec), 3.77 (Jan), 3.86 (Feb), 3.74 (Mar), 3.62 (Apr), 3.78 (May), 3.63 (Jun), 3.42 (Jul), 3.06 (Aug), 2.88 (Sep). This is not a data anomaly — it is a trend that has persisted for an entire year.
Active listings collapsed from 163 to 99, a 39.3% decline and by far the largest inventory contraction of any market tracked. Closed sales surged 44.1% from 34 to 49 — the biggest percentage gain in the region. New listings of 48 were up 4.3% from 46, meaning the inventory decline is driven almost entirely by accelerated absorption: homes are being consumed faster than they are being listed.
The median sale price rose 5.3% to $670,000, and the average jumped 14.7% to $771,134. YTD, the median of $649,900 is up 5.2% and the average of $729,271 is up 8.6%. Average CDOM dropped from 91 to 68 days (-25.3%).
Tellico Village’s resilience in a 7.63% rate environment is explained by its buyer profile. This is an age-restricted (55+) retirement community where the typical buyer is selling an existing home (often in a higher-cost market), arriving with substantial equity or cash, and purchasing with minimal or no mortgage financing. For these buyers, the mortgage rate is largely irrelevant — the relevant calculation is the combination of home price, property taxes, HOA/amenity fees, and cost of living relative to their origin market. By that calculation, Tellico Village continues to offer strong value, particularly for retirees migrating from the Northeast, Midwest, and other Southeast markets where comparable amenity-rich communities command higher prices.
The pending count of 32 in September, down 20.0% from 40, warrants monitoring but follows an exceptionally strong August (54 pending — the highest in the dataset). The combined August-September pending total of 86 versus 73 (+17.8%) indicates the pace remains healthy.
YTD, Tellico Village has posted 327 closings versus 301 (+8.6%) and 347 pending versus 328 (+5.8%).
Anderson County
Anderson County delivered steady numbers with one notable red flag. Closed sales of 77 were up 4.1%, pending of 75 rose 4.2%, and the absorption rate held at exactly 3.41 months — unchanged from a year ago and the only market with zero year-over-year movement. Active listings of 258 were up 4.0%, and new listings surged 26.2% to 106.
Pricing showed solid gains. The median sale price rose 5.9% to $365,915 — the strongest September median appreciation in the region — and the average jumped 12.3% to $409,667. YTD, the median of $347,950 is up 7.1% from $325,000, the best YTD median growth among all nine markets. At these price points, Anderson County remains the second most affordable option in the region behind only Roane County, which partly insulates it from the worst effects of high mortgage rates. At 7.63% on a $365,915 home with 20% down, monthly P&I is approximately $2,082 — painful but more accessible than the $4,050+ payment at Farragut’s median.
The red flag is days on market. Average CDOM surged 67.5% from 40 to 67 days, and median CDOM rose 44.4% from 18 to 26 days. These are the largest CDOM increases in the region and suggest that high borrowing costs are creating buyer hesitation at Anderson County’s price points — a population more likely to be first-time buyers or move-up buyers without the cash reserves that insulate Farragut or Tellico Village purchasers from rate pressure. The 26.2% increase in new listings also suggests sellers may be responding to price appreciation by entering the market, which could begin to put downward pressure on pricing if demand doesn’t absorb the additional supply.
YTD, Anderson County has posted 697 closings versus 673 (+3.6%) and 732 pending versus 694 (+5.5%).
Roane County
Roane County continues to emerge as the region’s affordability play, and the data supports a market that is gaining transaction momentum even as prices at the bottom of the range drive the median lower. Closed sales of 73 rose 14.1% from 64, the second-largest gain behind Tellico Village. Pending sales of 70 were up 6.1%. The absorption rate fell to 3.33 months from 4.57 (-27.1%), making Roane County one of the fastest-tightening markets in the region.
The counterintuitive pricing data — median down 7.8% to $327,500, average down 11.5% to $393,256 — reflects a composition shift rather than a price correction. The $200K–$350K range accounted for 48% of September closings versus 33% a year ago. More affordable homes are transacting at higher volumes, which mechanically pulls the median lower even as the market tightens. The YTD data confirms this: the median of $344,180 is up 5.9% and the average of $404,227 is up 5.0%.
Roane County’s $327,500 median (or $344,180 YTD) represents the lowest entry point among the nine markets. At 7.63%, monthly P&I on the median with 20% down is approximately $1,864 — still a significant commitment, but meaningfully more accessible than any other market in the region. This affordability advantage is driving the 16.1% YTD increase in closed sales (699 vs. 602) — the largest volume increase in the region — and the 17.5% increase in pending sales (740 vs. 630). Buyers priced out of Knox County, Blount County, and Loudon County are finding their way to Roane County.
Active listings declined 12.8% and new listings dropped 15.9%, tightening the supply side. Average CDOM of 73 days and the elevated YTD CDOM of 61 versus 51 (+19.6%) suggest that while more homes are selling, the process is taking longer — consistent with rate-sensitive buyers who need more time to arrange financing and make decisions.
Lenoir City
Lenoir City’s September data presents a mixed picture that requires context to interpret accurately. Closed sales dropped 25.0% from 52 to 39, the largest decline of any market. However, pending sales surged 26.8% from 41 to 52, the largest pending gain in the region, suggesting a strong rebound in October-November closings.
The median sale price of $390,000 represents a 21.6% decline from $497,500, but Lenoir City’s small monthly sample size (39 sales) makes the median extraordinarily volatile. In September 2026, 24 of 39 closings (62%) occurred below $400,000, pulling the median sharply lower. The YTD median of $469,900 versus $456,500 (+2.9%) gives a far more reliable picture: modest, steady appreciation consistent with the broader regional trend. The average sale price was up 4.2%, further confirming this is a compositional mix issue rather than a genuine price correction.
The absorption rate of 3.66 months, up only slightly from 3.52 (+4.0%), indicates Lenoir City remains a seller’s market. Active listings rose 6.9%, while new listings fell 13.1%. CDOM was essentially flat at 59 average (vs. 60) and 23 median (vs. 26).
YTD, Lenoir City has posted 374 closings versus 383 (-2.3%) and 416 pending versus 397 (+4.8%).
Sevier County
Sevier County remains the outlier — the one market in East Tennessee where the macroeconomic headwinds have combined with local structural factors to produce conditions that genuinely favor buyers.
With 8.83 months of supply, Sevier County is not just in buyer’s market territory; it is approaching the levels where price corrections become self-reinforcing. Active listings of 2,020, while down 4.7% from 2,120, remain elevated relative to the absorption rate. New listings of 479 increased 13.2% from 423, indicating a continued pipeline of inventory entering the market even as supply already exceeds demand.
The median sale price of $452,000 fell 15.6% from $535,500 — the largest price decline in the region by a wide margin. The sale-to-original-list-price ratio of 93.1% is the weakest in the region, indicating the most significant seller concessions. Average CDOM of 86 days and median DOM of 53 days are the highest in the region.
Sevier County’s challenges are both macro and micro. On the macro side, 7.63% mortgage rates punish a market where the buyer pool includes investors running revenue calculations — higher rates reduce the net present value of future rental income, making investment purchases less attractive at current price points. On the micro side, the STR regulatory environment has increased operating costs (permit fees, mandatory inspections, lodging taxes up to 15.75%), the three-strikes enforcement policy has introduced compliance risk, and the overall economics of marginal STR investments have deteriorated. Properties that made sense at 3.5% mortgage rates and peak 2022 nightly rates no longer pencil at 7.63% with normalized occupancy.
The 13.3% surge in pending sales (401 vs. 354) is the most encouraging signal in the Sevier County data. It suggests that at current price levels, buyers are beginning to find value, and Q4 closings could improve. However, with 8.83 months of supply, the path to market balance requires sustained absorption increases over multiple quarters. If pending volume continues at September’s pace, Sevier County could work below 7.0 months by spring 2027 — still a buyer’s market, but trending in the right direction.
Closed sales of 220 were up 5.8% from 208, a positive sign. But the math is clear: at the current absorption rate, it would take the equivalent of roughly 8.8 months to sell the existing inventory with no new listings added. With new listings running at 479 per month, the market needs sustained closing volumes well above 200 per month to make meaningful progress.
Regional Comparative Summary
Absorption Rate (September 2026, Months of Supply — Lower = Tighter)
Farragut (2.66), Tellico Village (2.88), Knox County (3.15), Roane County (3.33), Blount County (3.37), Anderson County (3.41), Loudon County (3.46), Lenoir City (3.66), and Sevier County (8.83). The regional average excluding Sevier County is 3.24 months.
Absorption Rate Year-over-Year Direction
Markets that tightened: Tellico Village (-43.8%), Roane County (-27.1%), Farragut (-21.5%), Loudon County (-20.1%). Markets that loosened: Lenoir City (+4.0%), Knox County (+2.9%), Blount County (+0.9%). Unchanged: Anderson County (0.0%).
Median Sale Price (September 2026)
Farragut ($712,206), Tellico Village ($670,000), Loudon County ($600,000), Sevier County ($452,000), Knox County ($402,050), Blount County ($400,900), Lenoir City ($390,000), Anderson County ($365,915), Roane County ($327,500).
Median Sale Price Year-over-Year Change
Anderson County (+5.89%), Tellico Village (+5.30%), Loudon County (+3.90%), Blount County (+2.81%), Knox County (-0.73%), Farragut (-2.30%), Roane County (-7.84%), Sevier County (-15.60%), Lenoir City (-21.61%).
YTD Median Sale Price Change (More Reliable Trend Indicator)
Anderson County (+7.06%), Tellico Village (+5.16%), Lenoir City (+2.94%), Knox County (0.00%), Blount County (+2.60%), Loudon County (+1.83%), Farragut (+2.34%), Roane County (+5.90%). YTD medians uniformly show flat-to-positive trends, confirming that the negative September readings in Lenoir City, Roane County, and Farragut reflect compositional noise rather than genuine corrections.
Fastest-Selling Markets (Median CDOM, September 2026)
Farragut (15 days), Lenoir City (23), Blount County (24), Anderson County and Knox County (26), Loudon County (28), Roane County (30), Tellico Village (32), Sevier County (53).
Key Trends and Their Macroeconomic Drivers
Trend 1: Supply Scarcity Continues to Trump Rate Pressure in Eight of Nine Markets
The defining feature of East Tennessee’s 2026 housing market is the persistence of seller’s market conditions in the face of mortgage rates that have nearly doubled from their pandemic lows. Eight of nine markets tracked maintain absorption rates below 4.0 months. The explanation is structural: homeowners locked into sub-4% mortgages from 2020–2022 are reluctant to sell and give up that rate advantage. This “lock-in effect” constrains new listing supply, keeping inventory below the level needed to shift the market toward balance even as buyer demand softens at the margin. The lock-in effect is most powerful in the $300K–$600K range, where the rate differential between a locked-in 3.0–3.5% mortgage and a new 7.63% mortgage creates a monthly payment increase of $600–$1,200 on the same loan amount — a powerful disincentive to move.
However, the lock-in effect is a depreciating asset. With each passing year, life events — job changes, divorces, retirements, deaths, growing families — force sales regardless of rate arbitrage. The steady uptick in new listings across several markets (Knox +5.6%, Anderson +26.2%, Blount +2.8%) suggests the effect is gradually weakening. The question is whether the loosening of supply accelerates faster than demand weakens, which would push absorption rates past the 4.0-month threshold. The current trajectory suggests this could happen in Knox County and Blount County by mid-2027 if rates remain above 7.0%.
Trend 2: Affordability Is Reshuffling the Buyer Pool Geographically
The combination of 7.63% mortgage rates and varied median prices across the region is driving a measurable geographic redistribution of buyers. Roane County’s 16.1% YTD increase in closings, Anderson County’s 3.6% increase, and the strength in the lower price tiers of both markets indicate that buyers are adjusting to affordability constraints by moving to less expensive geographies. At a $327,500 median, Roane County’s monthly P&I is $1,864 — roughly $418 less per month than Knox County’s $400,000 median and $1,190 less than Blount County’s $400,900 at the same terms, but the real comparison is to Farragut and Loudon County, where the monthly nut exceeds $3,400 and $3,414 respectively. The gap between the most and least expensive markets in the region has widened, and buyers are responding rationally.
Trend 3: The Luxury Segment Is Decoupled from the Rate Environment
Across Knox County, Farragut, Loudon County, and Tellico Village, the $750K+ and $1M+ segments are performing at or above year-ago levels. This reflects a buyer pool that is fundamentally different from the median buyer: more cash, more equity, less reliance on financing. The conforming loan limit of $832,750 acts as a natural filter — transactions above that threshold require either jumbo loans or significant cash, automatically selecting for higher-net-worth buyers. As long as the economy avoids recession and local employment remains strong, the luxury segment is likely to continue outperforming.
Trend 4: Days on Market Is the Canary in the Coal Mine
While absorption rates and prices have remained relatively stable, days on market has increased across most markets — in some cases dramatically. Anderson County (+67.5% average CDOM), Blount County (+28.3%), and Knox County (+18.2% median) are all seeing homes take meaningfully longer to sell. This is the earliest indicator of shifting dynamics: when homes stay on the market longer, sellers eventually reduce prices, which leads to lower median sale prices, which leads to lower appraisals, which leads to further pricing pressure. The CDOM expansion has not yet translated into significant price reductions outside of Sevier County, but it is a leading indicator that warrants close monitoring.
Trend 5: Sevier County Is Testing the Floor
Sevier County’s 15.6% median price decline, 8.83-month absorption rate, and 93.1% sale-to-original-list-price ratio represent a market that is actively repricing. The floor is being tested by the convergence of four forces: 7.63% mortgage rates that make investment math punitive, STR regulatory costs that compress operating margins, a continued trickle of STR-to-resale conversion inventory, and a buyer pool that is aware of the oversupply and negotiating accordingly. The 13.3% increase in pending sales suggests that the market is finding a clearing price, but price stability will not return until the absorption rate declines below 6.0 months — a level that likely requires either a meaningful drop in mortgage rates or a sustained reduction in new listing volume.
Trend 6: Builder Incentives Are Masking the True Impact of Rates
Regional builders offering rate buydowns and price concessions are effectively reducing the cost of homeownership without that reduction appearing in median sale price data. A 2-1 buydown on a $400,000 home at 7.63% saves the buyer approximately $400–$500 per month in the first year — a meaningful incentive. However, these costs are borne by the builder, reducing margins and potentially constraining future construction activity if rates remain elevated. The modest national single-family starts increase (+7.6%) occurred alongside significant incentive spending, raising questions about the sustainability of builder activity if rates remain at current levels through 2027.
Outlook and Predictions
Q4 2026 (October – December)
The immediate outlook is shaped by seasonal patterns, the rate environment, and the pending pipeline.
Historically, East Tennessee’s housing market slows in Q4 as the school year constrains family moves and holiday schedules reduce buyer activity. This seasonal pattern should produce lower closed sales volumes in October through December relative to the summer months. However, the strong September pending numbers across most markets suggest October closings will be solid before the seasonal fade sets in.
Mortgage rates at 7.63% — with the Fed signaling at least one more hike — create a challenging backdrop. If rates push above 8.0% following a November or December FOMC rate increase, buyer psychology could deteriorate sharply. The 48.1 consumer confidence reading suggests the marginal buyer is already hesitant; an 8-handle on mortgage rates could push hesitation into outright withdrawal for rate-sensitive segments of the market.
For most markets, expect absorption rates to tick slightly higher during Q4 (a normal seasonal pattern), median prices to remain flat to slightly positive, and days on market to continue expanding. Sevier County is likely to see continued price softening, though the pace may moderate as the pending pipeline converts to closings. Anderson County and Roane County should maintain transaction momentum given their affordability advantage.
First Half 2027
The first half of 2027 will be determined largely by the Federal Reserve’s rate trajectory and inflation readings. Two scenarios frame the range of outcomes.
In a scenario where inflation moderates meaningfully (CPI trending toward 2.5–3.0%, oil prices declining below $85/barrel due to geopolitical de-escalation), the Fed could pause rate increases and begin signaling potential cuts for late 2027. In this environment, mortgage rates could decline into the mid-to-high 6% range, which would release pent-up demand and potentially stabilize or reverse the absorption rate increases seen in Knox County and Blount County. Prices would likely hold or appreciate modestly, and transaction volumes would increase.
In a scenario where inflation remains sticky (CPI above 3.0%, oil above $100), the Fed continues tightening into Q1 2027, and mortgage rates remain above 7.5% or push higher. In this environment, the absorption rate trends in Knox County and Blount County continue toward the 4.0-month threshold, median prices flatten or begin to decline by low single-digit percentages, and Sevier County’s correction deepens. Farragut and Tellico Village would likely remain insulated due to their cash-heavy buyer pools, but even these markets would see some volume softening.
The most probable path sits between these scenarios: inflation moderately sticky but not accelerating, rates plateauing in the 7.0–7.75% range, and the Fed pausing by mid-2027 without cutting. In this baseline, East Tennessee’s core markets maintain seller’s market conditions but with continued gradual loosening, prices remain flat to up low single digits, and the regional market continues its slow normalization without a sharp correction.
What to Watch
The data points that will most directly determine East Tennessee’s housing trajectory in the coming quarters are, in order of importance: the 10-year Treasury yield (which drives mortgage rates directly), monthly CPI readings (which drive Fed policy), oil prices (which drive CPI), the pace of new listings versus pending sales (which determines absorption rate direction), and the sale-to-original-list-price ratio (which signals seller pricing power or its erosion). If the 10-year falls below 5.0%, the housing market breathes easier. If it rises above 5.5%, the pressure intensifies considerably.
Conclusion
East Tennessee’s housing market in September 2026 is defined by a paradox: conditions that should be unfavorable for real estate — 7.63% mortgage rates, $100+ oil, 48.1 consumer confidence, a hawkish Fed — are producing outcomes that remain surprisingly stable in eight of nine markets. The explanation is structural supply scarcity, driven by the lock-in effect of low-rate mortgages and insufficient new construction, combined with a local economy that is outperforming the national average in employment and wage growth.
This stability, however, is not invulnerability. The cracks are visible: rising absorption rates in Knox County and Blount County, expanding days on market across most markets, flat median prices, and a growing divergence between the luxury segment (which is thriving) and the core affordability segment (which is under pressure). Sevier County demonstrates what happens when supply-demand imbalances tip in the other direction — price corrections can be swift and significant.
For sellers, the message is disciplined pricing. The sale-to-original-list-price ratios of 93–96% across the region indicate that overpricing is being penalized. Homes priced correctly from the start are selling; those priced optimistically are sitting and eventually reducing. In a rising-CDOM environment, time on market is the enemy.
For buyers, the message is opportunity — but with patience. The market is slowly shifting in their favor in most areas, and the best negotiating position in years may arrive by mid-2027 if rates remain elevated. In Sevier County, the opportunity is already here. In Roane County and Anderson County, affordability provides entry points that are increasingly attractive.
For the market as a whole, the next six months will reveal whether East Tennessee’s structural resilience can withstand a prolonged period of 7.5%+ mortgage rates and weakening consumer sentiment. The data so far says yes — but just barely, and with diminishing margin.
Report prepared from MLS data downloaded October 7, 2026. Sevier County data provided separately. All statistics are based on single-family residential properties within the defined geographic boundaries. Past performance does not guarantee future results. This analysis is intended for informational purposes and does not constitute investment or financial advice.