Tennessee Is Winning in Affordability and Homebuilding: Can Gov. Lee Keep the Boom on Track?

Tennessee’s housing market continues to ride a wave of growth powered by strong migration, robust job creation, and steady new construction.

The Realtor.com® State-by-State Housing Report Card gave the Volunteer State a C, reflecting its ability to deliver new homes while maintaining moderate affordability. The report—part of the Let America Build campaign—scores each state on how well it balances affordability and homebuilding.

President Donald Trump recently put pressure on homebuilders to increase construction nationwide, given the issues with construction in the country. In a post on his Truth Social platform in early October, he accused major builders of hoarding lots to prop up prices—likening them to OPEC, which restricts oil output to maintain high prices.

“They’re my friends ... but now, they can get Financing, and they have to start building Homes. They’re sitting on 2 Million empty lots, A RECORD,” Trump wrote. He urged Fannie Mae and Freddie Mac to intervene and “get Big Homebuilders going” to “restore the American Dream.” 

Tennessee’s results show a fast-growing market that’s building at a decent pace, but one that must work to keep up with its own success.

Tennessee’s “C” grade explained

Realtor.com’s analysis gave Tennessee a total score of 53.1, one of the highest in the country. The state’s median listing price was $433,987 in 2024, paired with a median household income of $66,631. The Realtors Affordability Score came in at 0.55, showing that while housing costs have risen, many listings are still far from attainable for middle-income households.

On the construction front, Tennessee continues to outperform. The state accounted for 4.1% of all national housing permits in 2024, despite making up just 3.1% of the U.S. population—a permit-to-population ratio of 2.1%. The new construction premium—the difference between new and existing home prices—was just 15.3%, a sign that builders are delivering new homes priced competitively with existing listings.

The South sets the pace

Nationwide, new construction continues to be the key to affordability. The Realtor.com New Construction Insights report found that the median new-home price held steady at $450,797, while resale prices climbed 2.4%. That brought the national new construction premium down to 7.8%, the lowest ever recorded.

The South leads all regions in housing activity, accounting for the largest share of both new and existing listings. States like Tennessee, Georgia, and North Carolina continue to drive national housing growth thanks to favorable business climates, lower land costs, and growing populations.

But again, the pinch is being felt all over.

“America is short more than 4.7 million homes, and every new home built helps close that gap while fueling local economies," says Shannon McGahn, executive vice president and chief advocacy officer at the National Association of Realtors®.

"NAR research shows that the U.S. has faced a persistent housing shortage for more than a decade, driving up prices and limiting options for buyers. Expanding housing supply creates jobs, supports small businesses, and affords families the opportunity to build generational wealth.”

Governor Lee’s plan to sustain growth

In his 2025 State of the State address, Governor Bill Lee outlined budget and legislative priorities for the upcoming year to a joint session of the General Assembly and Tennesseans. Among his initiatives was a $60 million proposal to create the Starter Home Revolving Loan Fund, aimed at supporting the construction of new, affordable starter homes for hardworking Tennesseans, with a focus on rural communities.

He also proposed $30 million to fund the Rural and Workforce Housing Tax Credit, intended to make it easier to build homes and businesses, and $1 billion for the Tennessee Department of Transportation to address the state’s infrastructure needs, including expediting existing road projects and funding new ones across rural and urban areas. The plan would've also provide 0% interest construction loans to support the building of new homes.

This came nearly a year after Governor Lee in May 2024 to sign a bill designed to streamline the permitting process for construction projects.

“I think the primary thing that this bill will do is allow third parties to participate in the permitting and inspection process. That brings more people to the table to accomplish all the work in a shorter period of time. At the end of the day, it makes the process faster and shortens the time between a permit application, inspection, and final approval,” Lee said.

The bill authorizes the use of certain third-party examiners, inspectors, engineers, and other professionals instead of local or state officials for specific permitting processes and requirements. It also establishes procedures for how these third-party professionals can be used.

While that bill passed, in April 2025, Tennessee lawmakers rejected Governor Lee’s proposed $60 million Starter Home Revolving Loan Fund, meaning Gov. Lee will have to try again next year to put his plans through.

This article was produced with editorial input from Dina Sartore-Bodo and Gabriella Iannetta.