New home sales decrease 6% year-over-year in August

Sales: According to the Alabama Realtors, new home sales in August decreased 6.1% year-over-year (Y/Y) from 900 to 845 closed transactions, the third consecutive Y/Y decline. New home sales in July and August 2020, however, were significantly elevated due to shifting consumer preferences amid the pandemic. Following seasonal trends, sales decreased 3.2% from July. New homes represented 11.8% of all residential sales in Alabama during August, down from 13.1% one year ago. 

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Inventory: New homes listed for sale decreased 30.6% year-over-year from 2,227 listings one year ago to 1,546 in August. New builds represented 14% of all homes listed for sale in the state. 

At the current sales pace, all the active inventory on the market would sell in 1.6 months, up from 1.5 months in July and down from 2.2 months in August 2020. The equilibrium point where buyers and sellers have roughly equal bargaining power is 6 months of supply.

Pricing: The median sales price for new construction in August was $314,073, an increase of 10.3% from one year ago and a decrease of 1.3% from July. 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.

New homes sold in August averaged 25 days on the market (DOM), a record low and 33 days faster than one year ago.

National Overview: According to the U.S. Census Bureau, new home sales nationwide (seasonally adjusted annual rate) decreased 24.3% year-over-year from approximately 977,000 one year ago to 740,000 in August. Mirroring trends in the resale market, new home inventory increased 32.2% Y/Y. With slowing sales and rising inventory, months of supply (inventory to sales ratio) increased from 3.5 in August 2020 to 6.2 in August 2021.

The median sales price for new homes increased 20.1% Y/Y from $325,500 to $390,900.

Monthly new construction sales data is available for the following markets: Athens, Baldwin County, Birmingham, Calhoun County, Gadsden, Huntsville, Lee County, Marshall County, Mobile, Montgomery, Morgan County, Tuscaloosa, and the Wiregrass region.  

Click here to view the entire monthly report.

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

Additional Resources: Database of building permits and housing starts for all Alabama Counties and MSAs

Editor’s Note: All information in this article reflects data provided to the Alabama Center for Real Estate for the time period August 1 – 31, 2021. Thus, the performance represented is historical and should not be used as an indicator of future results.

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