Tri-Cities New Construction Market: Fewer Homes Sold, But Prices Still Rose

If you were looking only at the number of homes sold in the Tri-Cities new construction market this July, you might think the market was slowing down.

And you’d be right — at least when it comes to sales volume.

But there’s another side to the story.

In July, fewer new homes sold across the Tri-Cities than the same month last year. Yet, despite the drop in sales, both median and average home prices increased.

So what’s going on?

The short version is this: the Tri-Cities new construction market is getting smaller, more expensive, and more concentrated in a few communities.

According to the Northeast Tennessee Association of Realtors®, 56 new homes sold in July. That’s down 17.6% from the 68 homes that sold in July of last year.

At the same time, the median sales price increased 3.8% to $365,588, while the average sales price rose 3.9% to $403,651.

At first glance, fewer sales and higher prices may seem like they don't belong together. But they actually tell us something important about the types of homes buyers are purchasing.

Buyers are purchasing bigger, more expensive homes

The average new home sold in July was about 1,989 square feet, compared with 1,930 square feet a year earlier.

That may not sound like a huge difference, but it adds up.

Buyers weren't just paying more for the same house. They were also buying a little more house.

Price per square foot gives us another way to look at the market. In July, new construction averaged $207.38 per square foot, compared with $203.12 a year earlier.

So buyers were paying more per square foot and purchasing slightly larger homes.

That combination helped push overall prices higher, even though fewer homes changed hands.

Where are buyers purchasing?

The geography of the market also shifted.

Blountville led the region with 13 new home sales, followed by Johnson City with 11, Jonesborough with eight, and Kingsport with seven.

That's a significant change from a year ago.

In July of last year, Johnson City had 22 new home sales — twice as many as this July.

Meanwhile, Sullivan County, particularly Blountville and Kingsport, captured more of the new construction activity.

This is something worth watching because new construction isn't just about individual home sales. Where builders are selling homes today can give us clues about where the next wave of neighborhoods and development may occur.

Sellers are cutting prices — but buyers are negotiating less at closing

One of the most interesting parts of the July numbers is what happened with price reductions and negotiations.

Twenty-four of the 56 new homes that sold had experienced a price reduction before going under contract.

That's the same number as last year, but remember — there were 12 fewer total sales this year.

And the average price reduction was larger.

This July, the average price cut was about $19,012, compared with $15,523 last year.

That tells us builders and sellers are willing to adjust their asking prices when the original price isn't attracting buyers.

But here's the interesting part:

Once buyers got to the negotiating table, they actually received a smaller discount than buyers did a year ago.

Thirty-four of the 56 homes sold for less than their final asking price, with an average discount of about $5,520.

Last year, 32 of 68 homes sold below their final asking price, but the average discount was larger — about $7,717.

In other words, sellers appear to be pricing more aggressively after the fact, but buyers aren't negotiating as much off the final price.

That's a pretty interesting dynamic.

What does this mean for buyers and sellers?

For buyers, the July numbers suggest that new construction isn't necessarily becoming cheaper simply because fewer homes are selling.

In fact, buyers may be facing the opposite.

There are fewer sales, but the homes that are selling are larger and more expensive. And while builders may be willing to reduce prices to attract buyers, the final negotiated discount isn't necessarily huge.

For sellers and builders, the lesson may be about pricing correctly from the beginning.

A home that starts too high may sit on the market and eventually require a significant price reduction. But once the price is adjusted to where buyers see value, the actual negotiation at closing may be relatively modest.

And don't forget the HOA

There's one more trend worth mentioning.

Of the 56 new homes sold in July, 37 were located in a homeowners association, with an average HOA fee of about $337.

That's remarkably similar to last year, when 50 of 68 new homes were in an HOA and the average fee was approximately $335.

For buyers considering new construction, an HOA is increasingly something to factor into the monthly cost of homeownership — right alongside the mortgage, taxes, insurance and utilities.

The bigger picture

So, is the Tri-Cities new construction market in trouble?

I wouldn't describe July that way.

Instead, it looks more like a market reset.

We're seeing fewer transactions, but the homes that are selling are larger and more expensive. Sales are shifting geographically, builders are adjusting prices when necessary, and buyers are still willing to pay for the right property.

The big question isn't simply, "Are new home sales going down?"

It's where are buyers choosing to spend their money, what are they willing to pay, and where will builders respond with the next generation of new neighborhoods?

If the trends we saw in July continue, we could see the Tri-Cities new construction market become increasingly concentrated in certain communities — with higher prices and larger homes becoming the norm.

And for anyone thinking about buying or selling in the Tri-Cities, that's a trend worth paying attention to.

Market data referenced from Don Fenley’s August 14, 2026 report, “New Home Market Cools, Prices Heat Up”