Quarter 3 - 2025 Report
Let’s look back at Quarter 3 of 2025.
It’s early fall at the time of writing this. As the night air becomes a little cozier and summer leaves start to wither and crinkle before turning vivid shades of yellow and red, the inevitable seasonal change is happening - not just for the weather and nature, but also for economic cycles.
And around we go again. Will this time bring prosperity for home sellers and developers, or bargains for buyers?
The market has tilted slightly in favor of buyers, offering good news for those needing a mortgage. In 2025, mortgage rates have dropped by around 0.20% to 0.40%, with the 30-year fixed rate falling from around 6.50% in early September to about 6.13% by late September. This slight reduction was partially fueled by the 25-basis-point reduction in the federal funds rate by the Federal Reserve in September 2025.
Will lower monthly payments for new homebuyers encourage buyers to enter the market, as Freddie Mac predicts? Not so fast, according to realtors at my office. On a recent office Facebook thread in early October 2025, realtor colleagues lamented how S-L-O-W the market was across a range of price points, with many experiencing next to zero interest from buyers looking at and touring homes.
At this particular point in the cycle, we are at the tail end of 12 years of rapid appreciation, where we witnessed an extreme sellers’ market fueled by low interest rates. Right now, both home prices and interest rates are too high for many buyers, especially in a tightening job market. Realtors, lenders, and home buyers are all wondering how long sellers can hold off before they need to offer greater incentives and lower purchase prices.
Here in Nashville, it looks like the market has reached its peak, and home price appreciation has slowed to a crawl. There is more inventory, and price reductions are the new normal as sellers who need to move are faced with the pain of slashing their “Competitive Market Analysis” price to meet what the market actually dictates. Ouch! No fun for sellers.
Building permits are down 5% from 2024 numbers, and builders are facing greater challenges with higher material costs, labor shortages, and market adjustments. Developers are offering buyers more creative incentives, including mortgage rate buy-downs, 5% interest rates, closing cost credits worth tens of thousands of dollars, and even $50,000 flex-cash to be put towards home upgrades or the buyer’s mortgage.
Coupled with lower interest rates, incentives like these will help buyers feel more confident once again. But this time, they’ll be entering a gentler, more balanced market that will offer house hunters some relief.
Even with the slowdown, Nashville is one of the brightest stars in the US metro housing market and remains a desirable area for new construction.
Now, let’s look at the numbers.