Tennessee's homebuilding picked up in the spring, led by apartments, and the state did better than both the South and the country as a whole.
That is the headline from the latest quarterly housing report by Middle Tennessee State University's Business and Economic Research Center. The report was written by center director Murat Arik and paid for by the Tennessee Housing Development Agency. MTSU released it in late September, and it covers April through June.
"Tennessee's housing market showed mixed results across several sectors during the second quarter but remained stable overall," MTSU News reported in its summary of the findings.
Permits up, led by apartments
The construction numbers are the part builders will care about most. According to the full quarterly report:
- Multifamily permits rose 15.76% from the first quarter, compared with 12.35% in the South. Nationally, they fell 3.82%.
- Single-family permits rose 1.69% for the quarter, while they slipped 0.77% across the South and 0.72% nationally.
- Total housing permits rose 6.44% in Tennessee, compared with 1.92% in the South and a 1.95% decline nationwide.
Compared with a year earlier, the picture is a little softer for houses but still strong for apartments. Tennessee's single-family permits were down 0.70% from the second quarter of 2025. Multifamily permits were up 13.18%, and total permits were up 3.65%. Over the same year, total permits fell 3.62% in the South and 3.75% nationally.
"Tennessee, therefore, outperformed both the regional and national trends during the quarter," the report says.
Sales, prices and warning signs
Home closings rose in all three of the state's largest metro areas during the quarter. Knoxville posted the strongest gains, with closings up 7.21% for the quarter and 12.26% from a year earlier. Nashville closings rose 6.08% for the quarter and 6.32% for the year. Memphis closings rose 6.71% for the quarter but were still 5.86% below a year earlier.
More homes are on the market, too. Inventory rose 9.89% from a year earlier in the Nashville area, 13.32% in Memphis and 7.74% in Knoxville.
Prices are barely moving. Statewide, home prices rose 0.13% for the quarter and 2.68% over the year, behind national growth of 3.15%. Every Tennessee metro area still showed a yearly gain. Jackson led at 6.16%, followed by Cleveland at 5.47% and Johnson City at 4.14%. Over the quarter, Clarksville prices fell 2.28%, Morristown 1.67%, Chattanooga 0.66% and Nashville 0.34%.
Vacancy numbers moved in opposite directions. Tennessee's rental vacancy rate held at 7.8% for the quarter, well below the 9.4% of a year earlier, while the national rate climbed to 7.3%. The homeowner vacancy rate dipped to 1.4% from 1.6% in the first quarter, though it was still above the 0.9% of a year earlier.
Not every number was good news. Tennessee's mortgage delinquency rate rose to 4.46%, up from 3.82% a year earlier and above the national rate of 4.33%. Foreclosures stayed low at 0.14%.
On the jobs side, the statewide unemployment rate held at 3.57%. Total nonfarm employment was down 0.37% from a year earlier, with manufacturing jobs down 1.92%.
Housing-related tax money is strong. Real estate transfer tax collections rose from about $264 million to $297 million over the quarter. Mortgage tax collections rose from about $108 million to $135 million and were 25.83% higher than a year earlier.
Why it matters for Contractors
For commercial and multifamily contractors, the report's main message is that apartment permits are climbing in Tennessee even as they fall nationally. A 13% yearly gain in multifamily permits means more framing, concrete, MEP and finish work in the pipeline over the next year or two.
Single-family builders face a flatter market. Permits are about even with last year, inventory is building in every major metro and prices are barely rising. That points to more competition for buyers and more pressure on builders to hold costs down.
The rising delinquency rate is worth watching too, because it shows more Tennessee households are struggling with mortgage payments. Remodelers and repair contractors who rely on homeowners paying out of pocket should keep that in mind when planning for next year.
The report comes out every quarter, so the third-quarter numbers will show whether the spring rebound in permits held up through the summer. MTSU posts the reports on its Business and Economic Research Center website, and THDA keeps an archive of past editions.