Alabama home sales rise 5% in December

Sales: According to the Alabama Association of REALTORS, December home sales in the state increased 4.6% year-over-year (Y/Y) from 6,355 to 6,648 closed transactions. Following seasonal trends, sales increased 7.9% from November. Sales are up 10.5% year-to-date. Two more resources to review: Quarterly Report and Annual Report.

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Inventory: December listings (8,720) decreased 13.0% from November 2021 and decreased 27.4% from one year ago. At the current sales pace, all the active inventory on the market would sell in 1.3 months, down from 1.6 in November and down from 1.9 months in December 2020. The equilibrium point where buyers and sellers have roughly equal bargaining power is 6 months of supply.

Pricing: The statewide median sales price in December was $230,799, an increase of 20.5% from one year ago and an increase of 4.8% from November. 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 December averaged 47 days on the market (DOM), 22 days faster than one year ago.

Forecast: December sales were 505 units, or 8.2%, above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 6,143 sales for the month while actual sales were 6,648 units. ACRE forecast a total of 78,403 sales in the state year-to-date, while there were 80,165 actual sales through December, a difference of 2.3%.

New Construction: The 1,132 new homes sold represent 17.0% of all residential sales in the state in December. Total sales increased 44.4% from November 2021 and decreased 0.2% from one year ago. The median sales price was $321,024, an increase of 3.8% M/M and an increase of 17.2% Y/Y. New homes sold in an average of 25 days, 33 days faster than December 2020.

NAR Commentary: According to the National Association of Realtors (NAR), existing home sales decreased 4.6% month-over-month in December, breaking three consecutive months of gains (seasonally adjusted annual rate). However, the 6.12 million home sales in 2021 represent an increase of 8.5% from 2020 and the highest annual level since 2006. The median sales price for all housing types was $358,000, rising 15.8% year-over-year and marking 118 consecutive months of year-over-year gains. Rising home prices are largely a result of low housing inventory amid sustained demand. Supply dropped to an all-time low of 910,000 listings in December, down 18.0% from November 2021 and down 14.2% from one year ago. December’s 1.8 months of supply (MOS) decreased from 2.1 during the prior month and 1.9 one year ago.

Lawrence Yun, chief economist for NAR said, “December saw sales retreat, but the pull back was more a sign of supply constraints than an indication of a weakened demand for housing. Sales for the entire year finished strong, reaching the highest annual level since 2006.”

Yun added that future home sales are likely to slow somewhat because of rising mortgage rates, but he forecasts rates will stay below 4% by the end of 2022. 

Yun also said that he expects home price growth to moderate. “This year, consumers should prepare to endure some increases in mortgage rates. I also expect home prices to grow more moderately by 3% to 5% in 2022, and then similarly in 2023 as more supply reaches the market.”

ACRE Commentary: Home sales in Alabama grew again in December, rising 4.6% from one year ago and bringing the annual gain to 10.5%. Twelve of the 24 markets reporting sales data to ACRE reported sales gains from one year ago. 

The statewide median sales price gained 20.6% Y/Y in December, well above the average of 12.3% Y/Y during 2021. Price growth has accelerated as supply retreated significantly in December. Properties listed for sale declined 13.0% from November and 27.4% from one year ago. Unsold inventory is at 1.3 months of supply, down from 1.6 in November and down from 1.9 months in December 2020.  

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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 December 1 – 31, 2021. Thus, the performance represented is historical and should not be used as an indicator of future results.