With 2025 now in the rearview, it's a good time to step back and take stock of Louisville's real estate market over the full year. Inventory continued building steadily across segments, fostering solid sales growth while moderating the sharp price gains of prior years. Interest rates eased from near 7% to just under 6% by year-end, boosting affordability, while national inflation cooled to about 2.5% and Kentucky's job growth and remote work opportunities drew more buyers to our affordable market. All in all, 2025 delivered a steady, more sustainable market; sales picked up momentum, new inventory provided meaningful relief, and conditions felt increasingly favorable for both buyers and sellers.
The Overall Louisville Market
Building on the gradual inventory recovery noted in our quarterly reports over the past year, 2025 saw active listings climb by 13.3% year-over-year, providing much-needed relief to buyers and fueling a 3.5% increase in the number of homes sold. This uptick in transactions reverses the declines observed in 2022 through early 2024, when tighter supply and higher rates suppressed activity, and aligns with the national trend of renewed demand as borrowing costs eased. Despite the added supply, strong fundamentals kept values elevated, with the median sold price per square foot rising 3.1%, a moderated pace compared to the double-digit gains during the pandemic, reflecting a market shifting from scarcity-driven bidding wars to more deliberate negotiations. Average days on market increased by 12.2% as buyers took slightly longer to evaluate their increased options, while inventory levels averaged 2.5 months, still favoring sellers but continuing to inch towards the balanced 4-6 month range. Over the last couple years, we've seen a clear trend of inventory expansion from the low of 3-weeks of 2021 which has helped temper price growth, while supporting a 18.5% cumulative sales volume increase since 2023's trough. As always, these figures vary across submarkets, so check out our full 2025 Annual Market Report for neighborhood-specific insights.
High-End Louisville Market (Homes $500,000+)
Louisville's high-end segment (homes $500,000 and above) continued its outperformance, a trend we've highlighted in reports dating back to 2019 when relative inventory abundance began attracting equity-rich buyers. In 2025, the number of sales surged by 19.0% year-over-year, outpacing the overall market as active listings grew by 23.4%, offering more premium options in desirable east-end communities. While inventory has grown, the demand has kept pace, holding the absorption rate steady from last year with 3.2 months of homes available for sale. As would be expected from this dynamic, pricing held firm with the median sold price per square foot advancing a respectable 3.6%. Average days on market ticked up modestly by 3.6%, as this new supply only slightly outran demand. Looking back over the past few years, this segment has consistently led in transaction growth (up over 45.6% cumulatively since 2021), largely due to its insulation from rate sensitivity (buyers here often pay cash or have substantial down payments) contrasting with the entry-level market's volatility. Gains weren't uniform, ranging from mid-single digits to double digits so review our detailed 2025 report for submarket breakdowns.
$1M+ Market
Echoing the high-end's momentum, Louisville's ultra-luxury segment posted standout results in 2025, with the number of homes sold jumping 30.3% year-over-year, extending a multi-quarter streak of robust activity that began accelerating in late 2023 as inventory loosened with a record-setting 305 luxury properties changing hands. This included seven transactions above $5M, a level of ultra-luxury activity that was unthinkable just a year or two ago. This impressive growth, which has seen transactions more than triple cumulatively since 2020, can be attributed to Louisville's emergence as a niche destination for affluent buyers seeking equestrian properties, riverfront estates, and custom builds, amplified by national trends like wealth migration from high-tax states amid remote work flexibility. Inventory remained the most plentiful at 5.2 months, providing ample fuel for deals without the scarcity that plagues lower tiers, while the median sold price per square foot climbed 5.5%, the strongest appreciation among segments, reflecting premium features and land values holding up well in an inflationary environment. Over the few years, this thin but dynamic market (representing under 1/5 of 1% of total sales) has benefited from economic tailwinds, including stock market rallies that enhanced buyer liquidity. As we've noted previously, "if you have inventory, they will come" still holds true here, positioning the segment for continued strength barring major shifts in luxury demand or a downturn in the equity markets.
As market conditions continue to evolve toward equilibrium, with inventory trends suggesting more balanced dynamics ahead, proper pricing, marketing, and execution remain essential for sellers to maximize outcomes in a landscape where buyers have regained some negotiating power. Thinking of selling and curious what all this means? Contact us to find out how the market conditions impact your home and what it means for your next home purchase.
Click to download the 2025 Annual Market Report