New home construction in unincorporated Walker County slowed in 2025 as rising construction costs pushed home prices higher, but county officials say activity remains historically strong despite the slowdown.

The Walker County Planning Office issued 244 permits for new single-family homes last year, an 11% decline from 2024, when 276 permits were issued. Even so, 2025 stands as the third-best year on record for new home construction in the county. Permit activity was strong through the first half of the year and was on pace to surpass 2024 before tapering off during the final five months.

“Construction costs and market uncertainty slowed new home starts in the second half of 2025,” said Jon Pursley, Walker County’s director of planning. “However, permit levels remain well above historical averages, and we expect steady activity to continue as market conditions improve.”

Most of the new construction occurred in unincorporated areas near Rossville, Rock Spring, and LaFayette. The Rossville district led the county for the third straight year, with 87 permits issued, largely in subdivisions around Happy Valley Road. The area continues a sharp rebound from 2022, when just five new homes were built in the northern part of the county.

The Rock Spring area recorded 57 new homes, while 48 homes were permitted near LaFayette. About 43 permits each were also issued in the Chickamauga and Rising Fawn districts.

While fewer homes were built, the cost of construction increased sharply. The average size of a new home dropped by 114 square feet to 2,405 square feet, but the average construction cost jumped $91,489, reaching $359,119 per home. Higher material prices and labor costs drove the increase. Overall, the total valuation of new homes topped $87 million, an 18% increase over 2024.

Rising construction costs also shifted buyer behavior. Data from Greater Chattanooga Realtors shows that 690 of the 807 homes sold in Walker County in 2025 were existing homes, with an average sale price of $236,517.

Despite the slowdown in new starts, county officials remain optimistic about the year ahead. Planning officials say the number of land disturbance permits for new subdivisions suggests 2026 could be another solid year for residential growth in Walker County.