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Memphis Housing Market Faces Decline in Sales Despite Rising Prices

Colorful homes in Memphis reflecting the current housing market trends

News Summary

Memphis is witnessing a shift in its housing market with rising home prices but a significant decrease in sales. A report indicates home sales fell by 7% year-over-year while average prices continue to rise, suggesting a discrepancy between supply and demand. The current market favors sellers slightly, with low inventory impacting buyers. Projections for home value growth remain optimistic, though challenges persist, especially for first-time buyers facing higher mortgage rates.

Memphis is experiencing a notable shift in its housing market as recent data reveals that while home prices continue to increase, sales have depreciated significantly in April 2025. According to the latest report from the Memphis Area Association of Realtors, home sales fell in comparison to both the previous month and the same time last year, indicating a growing disparity between supply and demand in the local real estate landscape.

In detail, the report found that home sales in the Memphis area decreased by 7.0% in January 2025 compared to January 2024, with 1,161 homes sold versus 1,249 in the prior year. However, there was a slight uptick in home sales compared to December 2024, with sales increasing by 4.8% from 1,108 homes. While this pattern reflects some market volatility, the overarching trend shows a persistent rise in average home prices, suggesting that despite lower sales volume, the homes that are selling are commanding higher prices.

The current market conditions indicate a slight lean towards a seller’s market—with slightly more buyers than available homes—but the situation is not overwhelmingly skewed in favor of sellers. The average Days on Market (DOM) for homes sold in January 2025 stood at 58 days, illustrating a 16% increase from December 2024. Meanwhile, there were 3,511 homes listed for sale, a modest 1.2% increase from January 2024, pointing towards relatively low inventory levels.

Interestingly, the median home price in Memphis is relatively affordable when compared to national standards. As of December 2024, the national median home price hit $407,500, which represents a year-over-year increase of 6%. In contrast, Memphis’s median home price is currently at $190,000, underscoring the city’s appeal for potential homeowners.

Market Forecast and Trends

Zillow’s projections present an optimistic outlook for the Memphis housing market, forecasting a steady growth in home values at approximately 3.3% throughout 2025. The overall housing sector in Memphis is anticipated to experience moderate growth with ongoing increases in home values attributed to stable interest rates and a healthy local economy. Over the past decade, home prices in Memphis have escalated by an impressive 110.69%, averaging an annual increase of 7.74%.

For the year ahead, the homeownership rates are expected to drop slightly by 0.3%. Conversely, existing home sales are projected to see a modest rise of 1.5%, reaching an estimated 4.07 million across the nation. Furthermore, the inventory of existing homes for sale is anticipated to rise by 11.7% compared to the previous year, potentially alleviating some of the pressures seen within the market.

Challenges Ahead for Buyers

First-time homebuyers may encounter challenges in 2025, as mortgage rates are predicted to average around 6.3%. These elevated rates could create hurdles for those looking to enter the housing market, despite the modest increase in inventory levels. Even with the possibility of more multifamily units being constructed, it is projected that rental prices will not see significant decreases, maintaining financial pressure on prospective tenants and buyers alike.

In summary, while the Memphis housing market is characterized by rising home prices and declining sales, the forecast for the remainder of the year suggests a complex mix of challenges and opportunities. The interplay of supply, demand, and economic factors will continue to shape the environment for both buyers and sellers in the coming months.