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Memphis Housing Market Sees Decline in Sales Amid Rising Prices

Aerial view of Memphis showcasing homes and the skyline.

News Summary

The Memphis housing market is experiencing a significant drop in home sales as of January 2025, with transactions reducing by 7.0% year-over-year. Despite this downturn, median home prices continue to rise, reaching $190,000, indicative of sustained demand amid a challenging buying environment. Inventory levels also show a slight increase, suggesting a seller’s market, while buyers face hesitancy due to increased mortgage rates. Market experts project moderate growth in home values throughout 2025, although concerns about potential overvaluation persist.

Memphis is experiencing a notable shift in its housing market, with home sales declining sharply in April 2025 while prices continue to climb, according to the latest report from the Memphis Area Association of Realtors. Sales for the month saw a reduction of 7.0% compared to the same period last year, indicating a challenging environment for buyers in the region.

In January 2025, only 1,161 homes were sold in Memphis, a significant decrease from the 1,249 homes sold in January 2024. The decline in sales numbers comes even though there was a slight uptick of 4.8% from December 2024, when 1,108 homes were sold. This presents a complex picture where fewer transactions are taking place despite rising pricing trends, hinting at buyer hesitancy amidst increased costs of borrowing.

Despite the drop in the volume of home sales, the average sales prices in the Memphis real estate market have continued on an upward trajectory. As of January 2025, the median home price reached $190,000, which remains significantly lower than the national figure of $407,500. This price elevation suggests that demand for homes persists, albeit at a slower sales pace.

Market Conditions and Trends

Current inventory levels indicate that there are 3,511 homes available for sale in January 2025, marking a modest 1.2% increase from January 2024. However, with lower inventory levels compared to the balanced market requirement, this indicates a seller’s market, which is characterized by fewer listings and heightened competition among buyers. Market experts typically identify a balanced market as having roughly six months of supply.

The average Days on Market (DOM) for homes increased to 58 in January 2025, reflecting a 16% rise from the previous month. This suggests that while homes remain in demand, the sales process may be taking longer as buyers weigh their options amidst rising mortgage rates, which have reached around 7% as of February 2025. This marks a significant departure from the record lows experienced in prior years and is likely contributing to the hesitancy observed among potential homebuyers.

Future Projections

Despite the current trends, the Memphis housing market is anticipated to experience steady, moderate growth throughout 2025, with home values projected to increase by 3-4% annually. Over the last decade, home values in the area have appreciated significantly, with an overall increase of approximately 110.69%, translating to an average annual growth rate of 7.74%. However, recent data has indicated a slight dip of 1.15% in appreciation over the last quarter, raising further questions about market stability.

Investors and potential buyers are advised to remain vigilant regarding local market dynamics. A Fitch Ratings analysis conducted in early 2024 suggested that home prices in Memphis could be overvalued by around 11.5%. Furthermore, an annual change in home prices showed a minor decline of 0.1% in June 2024 compared to the previous year.

As the landscape continues to evolve, real estate professionals point to the increasing number of for-sale listings, which may influence future home prices and provide better opportunities for buyers. As noted in previous reports, nearly 60,000 home purchase cancellations were recorded in late 2024, highlighting the complexities buyers face in today’s market environment.

Looking ahead, predictions for home price growth in Memphis for 2024 range between 3% and 5%. This outlook incorporates anticipated cuts to interest rates by the Federal Reserve in the latter part of the year, which could further impact buyers’ ability to enter the housing market.

In summary, while Memphis is experiencing a reduction in home sales, the overall housing market remains resilient with increasing prices. Buyers are encouraged to act promptly before potential shifts in the market occur, suggesting that the situation remains dynamic and fluid.