New homes sold last year in the Tri-Cities area were smaller than the year before and both the median and average sales prices declined. There were 741 new home sales last year, up 23% from the previous year.

According to the Northeast Tennessee Association of Realtors (NETAR) there were 741 sales with a median sales price of $344,615, down 12% from 2023. The average sales price was $369,454, down 6% from $393,186.

Those price declines result from builders reducing the new home size to make them more affordable. Like many other markets, the Tri-Cities region is struggling with affordability issues.

Last year, the average size was 1,904 sq. ft., down from 2,317 sq. ft. during the previous year.

Most of the sales (48%) used conventional financing. Cash sales increased 24% (174 sales) from the 2023 total. VA sales increased 11% (83 sales) from the 2023 total.

During a recent 2025 forecast meeting Robert Dietz, chief economists of the National Association of Home Builders, said most builders – especially those with deep pockets – will also continue their focus on using sales incentives to attract buyers. Those incentives include smaller products, rate buydowns, and amenity upgrades.

 Dietz said. “Any frustrated home buyer who is unable to find what they’re looking for in the [resale market] should shop for a new home to see if the upgrades and amenities” and incentives could make homeownership more attractive, he said. He also noted an uptick in lower-cost projects, like townhome construction, which grew by 6% in 2023, that could offer more affordable and entry-level homes.

There has been an increase in local townhome developments, but much of that has been focused on build to rent investors.

Builders are feeling positive about 2025 opportunities and look for an extension of tax cuts. They’re also concerned about potential tariffs and the negative effect of deportations on the construction labor force.

There were 58 new home sales in December, up one from December last year. The median sales price was $371,910, up from $355,000 this time last year.

The average size of a December new home sales was 2,070 sq. ft. During December 2023, it was 2,017 sq. ft.