Prices Are High In The Nashville Housing Market But Sales Have Slowed In 2023

Prices Are High In The Nashville Housing Market But Sales Have Slowed In 2023

Time Stamp: October 11, 2023 11:04 AM
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In 2023, the Nashville housing market presents a paradox that has left both buyers and sellers scratching their heads. While the price tags on homes continue to soar, reflecting a robust demand and a city bursting with potential, the pace at which properties are changing hands has noticeably decelerated. This juxtaposition poses a multitude of questions about the underlying factors driving the market dynamics and what they portend for the future of Music City’s real estate landscape.

Read on to find out what’s going on in the Nashville housing market and whether it could be facing a crash.

Nashville Housing Market 2023: Overview

We analyzed 19 major cities plus the housing market for the Nashville metro area overall. Whereas many other major American housing markets, such as the Austin housing market, have experienced marked declines in home prices year-over-year, in the Nashville housing market, prices have increased in most cases. In 12 out of 19 cities in the greater Nashville housing market we analyzed, the median sale price increased year-over-year from August 2022 to August 2023.

As you can see, home prices in the city of Nashville proper and prices for the Nashville metro area overall have moved closely in step with each other over the last five years. The median sale price in the Nashville metro area rose by 2.3%, from $444,820 in August 2022 to $455,000 in August 2023, while in Nashville proper, it rose by 3.3%, from $445,000 to $459,900 over the same period. The state-wide median sale price for Tennessee increased more, by 5.8%, from $361,000 in August 2022 to $381,900 in August 2023. Furthermore, the three-year change in home prices is nearly identical across all three areas: The median sale price in Nashville increased by 37.3% from August 2020 to August 2023; in the Nashville metro area, it increased by 37.9%; and for Tennessee overall, it increased by 37.8%

The median sale price in Nashville reached a peak of $470,000 in May 2022 and, despite the rate hikes instituted since then, the city’s median sale price reached another high in July 2023, when it stood at $460,000. The table below breaks out the median sale prices in all the cities of the Nashville metro area we analyzed, from August 2018 through August 2023. The table is ranked in order of areas that experienced the greatest year-over-year increase in their median sale price:

Hendersonville experienced the largest year-over-year decline, falling by 9.1%, from a median sale price of $549,950 in August 2022 to $500,000 in August 2023. However, this must be tempered by the fact that, in pre-pandemic days, home prices in Hendersonville were far lower: In August 2018, the median sale price in Hendersonville was $298,500. Thus, Hendersonville experienced one of the biggest pandemic-induced boosts in home prices in the Nashville housing market. On the other end of the spectrum, Goodlettsville witnessed the largest increase year-over-year, rising by 24.1%, from $352,500 in August 2022 to $437,500 in August 2023. Goodlettsville, however, was also one of cities that was hit hardest by the pandemic’s impact — no doubt hurt by the fact that the Tyson Foods TSN plant situated there was the core of a Covid-19 cluster in spring 2020. Whereas in August 2018, the median sale price in Goodlettsville was $318,700, by August 2020, it had fallen to $267,443.

Inventory in the Nashville Housing Market Presents a Mixed Picture

Most of the cities we analyzed in the greater Nashville housing market experienced decreases in available inventory since last year. However, in both the city of Nashville proper and in the Nashville metro area overall, inventory grew year-over-year, by 11.6% and 0.8% from August 2022 to August 2023, respectively. That being said, the growth in Nashville’s available for-sale inventory is minor compared to other American cities, such as the Denver housing market where inventory rose by more than 80%. The table below details the change in available for-sale inventory in the greater Nashville housing market:

Hendersonville, which has seen its median sale price drop by 9.1% year-over-year, also experienced the greatest increase in for-sale inventory: From 213 homes for sale in August 2022, Hendersonville’s available inventory grew by 21.6%, reaching 259 homes for sale in August 2023. In total, four out of 18 of the Nashville area housing markets analyzed here witnessed an increase in inventory year-over-year. Otherwise, the majority of cities in the greater Nashville area experienced declines.

Nashville’s surrounding suburbs generally saw available inventory decrease from August 2022 to August 2023. In six cities, the year-over-year decline in inventory was 10% or more, with the city of Springfield experiencing the largest drop: From 108 homes for sale in August 2022, inventory fell by 38.9%, to only 66 homes for sale in August 2023.

Houses for Sale in the Nashville Housing Market Are Staying on the Market Longer than Before

An additional, very useful metric for analyzing housing market activity is the length of time a home for sale spends on the market before getting bought up. Redfin RDFN refers to this measure as days on market, which represents the monthly median days on market a home for sale sits before being taken off the market. In the Nashville metro area, the median number of days on market of a home for sale rose by 36.4%, from 33 days in August 2022 to 45 days in August 2023. Indeed, in all 18 major cities in the greater Nashville housing market the number of days on market increased year-over-year:

What is startling is that, in several cities in the Nashville area, the median days on market have reached levels higher than pre-pandemic days. In Lebanon, for instance, the median days on market rose the most, by 114.3%, from 28 days in August 2022 to 60 days in August 2023. This latter figure is higher than the median days on market back in August 2018, when it was 48 days. The same goes for:

  • Murfreesboro housing market: 40 days in August 2023 versus 36 days in August 2018
  • La Vergne housing market: 50 days in August 2023 versus 41 days in August 2018
  • Gallatin housing market: 55 days in August 2023 versus 50 days in August 2018
  • Dickson housing market: 66 days in August 2023 versus 49 days in August 2018
  • Hendersonville housing market: 49 days in August 2023 versus 48 days in August 2018

This suggests a substantial normalization in housing activity in these markets. And this is reflected in the data on sales-to-list ratio — the mean ratio of each home’s sale price divided by their list price covering all homes — in these markets. Typically, in hot housing markets, the sales-to-list ratio tends to be above 100%, because homes are selling for more than their initial list price. In the five cities listed above, the sales-to-list ratio has not moved much since last year or even over the last five years. In the city of Nashville housing market, the sales-to-list ratio was 98.6% in August 2018 and was 98.5% in August 2023.

The Bottom Line on a Nashville Housing Market Crash

The idea that the Nashville housing market will crash seems unlikely, largely due to the fact that it has already experienced a noticeable slowdown in homebuying activity. In contrast to many other housing markets in the U.S., prices in the greater Nashville area have increased year-over-year and the gains have been fairly modest. The number of monthly home sales have declined year-over-year in most cities we analyzed, but that trend has been fairly consistent over the last three years, as opposed to a sharp and more immediate downturn. And the percentage of active listings that had their prices dropped — which typically increases year-over-year in housing markets that are in the midst of a bubble — has decreased by 5.4% in the Nashville housing market from August 2022 to August 2023. Indeed, only two cities in the greater Nashville area — La Vergne and Smyrna — experienced a rise in the percentage of active listings with price drops year-over-year.

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