Demand remains strong in Alabama’s housing market

Sales: According to the Alabama Association of REALTORS, June home sales in the state increased 14.4% year-over-year (Y/Y) from 7,198 to 8,234 closed transactions, marking 13 consecutive months of Y/Y gains and the highest monthly sales total in the Center’s database. Following seasonal trends but to a greater degree, sales increased 18.7% from May. Sales are now up 21.8% year-to-date. Two more resources to review: Quarterly Report and Annual Report.

For all statewide housing data, click here.

Inventory: June listings (9,954) increased 6.3% from May 2021, the first month-over-month (M/M) inventory gain since the onset of the pandemic in April 2020. However, housing inventory in the state still remains tight with listings down 39.4% from one year ago, with the last Y/Y inventory gain in February 2015.

Months of supply (inventory to sales ratio) also decreased from 2.3 to 1.2, a record low and reflecting a market where seller’s generally have elevated bargaining power.

Pricing: The statewide median sales price in June was $216,580, a record high and an increase of 11.7% from one year ago and an increase of 4.9% from May. 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 June averaged 48 days on the market (DOM), a record low and 36 days faster than one year ago.

Forecast: June sales were 693 units, or 9.2%, above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 7,541 sales for the month while actual sales were 8,234 units. ACRE forecast a total of 38,895 sales in the state year-to-date, while there were 39,288 actual sales through June, a difference of 1.01%.

New Construction: The 1,001 new homes sold represent 12.2% of all residential sales in the area in June. Total sales increased 11% from May 2021 and decreased 0.9% from one year ago. The median sales price in June was $265,046, a decrease of 8.2% (M/M) and an increase of 6.3% Y/Y. New homes sold in an average of 37 days, a record low and 26 days faster than June 2020.

NAR Commentary: According to the National Association of Realtors (NAR), existing home sales nationwide increased in June rising 1.4% from May (seasonally adjusted annual rate). The gain ends four consecutive months of declining sales. June sales were up 22.9% from one year ago. The median sales price for existing homes hit another historic high ($363,300), rising 23.4% year-over-year and marking 112 consecutive months of year-over-year gains. Rising home prices are largely a result of low housing inventory amid significantly elevated demand. Supply did improve somewhat, rising 3.3% from May 2021 but is still down 18.8% from June 2020. Months of supply (2.6) increased modestly from May but is still well below June 2020 (3.9).

Lawrence Yun, chief economist for NAR said, “Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales. Home sales continue to run at a pace above the rate seen before the pandemic.”

Yun added that home prices are unlikely to decline saying, “At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year. Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available.”

ACRE Commentary: Home sales in Alabama increased year-over-year (Y/Y) for the 13th consecutive month in June, rising 14.4%. Demand remains significantly elevated as home sales are now up 21.8% year-to-date. The statewide median sales price hit another record high of  $216,580, with sales price growth rates moderating somewhat, rising 11.7% Y/Y. The state’s housing supply received a small measure of relief as listings increased 6.3% from May, but is still down 39.4% from one year ago. June’s 1.2 months of supply also represents a record low, with properties selling an average of 34 days faster than June 2020.

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 June 1 – 30, 2021. Thus, the performance represented is historical and should not be used as an indicator of future results.