Alabama home sales post another significant gain in October

Sales: According to the Alabama Association of REALTORS, October home sales in the state increased 32.2% year-over-year from 5,211 to 6,889 closed transactions. Going against seasonal trends, sales increased 2.5% from September, and are now up 10.9% year-to-date. As the COVID-19 pandemic continues to unfold, however, declining sales activity remains a possibility in the months ahead. Two more resources to review: Quarterly Report and Annual Report.

For all statewide housing data, click here.

Inventory: Homes listed for sale decreased 32.3% from 20,719 listings one year ago to 14,023 in October. Months of supply (inventory to sales ratio) dropped from 4.0 to 2.0, reflecting a market where sellers generally have elevated bargaining power.

Pricing: The statewide median sales price in October was $199,433, an increase of 16.3% from one year ago and a decrease of 0.7% from September. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.

Homes sold in October averaged 71 days on the market (DOM), 17 days faster than one year ago.

Forecast: October sales were 1,701 units or 32.8% above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 5,188 sales for the month, while actual sales were 6,889 units. ACRE forecast a total of 55,899 residential sales year-to-date, while there were 60,473 actual sales through October, a difference of 8.2%.

New Construction: The 916 new homes sold represent 13.3% of all residential sales in the area in October. Total sales increased 33.1% year-over-year, extending the area’s streak of Y/Y gains in new home sales to 16 consecutive months. The median sales price in October was $261,965, an increase of 3.2% from one year ago and an increase of 0.8% from September. New homes sold in an average of 54 days, 46 days faster than October 2019.

NAR commentary: According to the National Association of Realtors (NAR), existing home sales nationwide increased 4.3% from September (seasonally adjusted annual rate), rising for the fifth consecutive month, and increased 26.6% from one year ago. Sales prices continued to grow at higher rates than before the pandemic, rising almost 16% year-over-year.

Lawrence Yun, NAR’s chief economist, said, “Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year. The surge in sales in recent months has now offset the spring market losses. With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.”

ACRE commentary: Home sales in Alabama increased for the fifth consecutive month in October, rising 32.2% year-over-year. Sales usually begin to slow in the fall months, but low mortgage rates and demand for more housing space has resulted in significantly elevated sales activity. For additional context, year-over-year sales gains in October averaged 6.7% during the last 5 years, and it is unlikely that the large gains seen in recent months will continue long-term. Sales prices continue to grow at a faster rate than before the pandemic, which could motivate more potential sellers to list their homes going forward. Tight inventory has played a large role in driving sales prices upwards, with total listings down 32.3% in October.

Click here to view the entire monthly report.

The Alabama Residential Monthly Report is developed in connection with the Alabama Association of Realtors.

Editor’s Note: All information in this article reflects data provided to the Alabama Center for Real Estate for the time period October 1 – 31, 2020. Thus, the performance represented is historical and should not be used as an indicator of future results, particularly considering the impact of COVID-19 on the housing market.