Statewide Summary: Home sales declined slightly in March, falling 1.2% from one year ago. Contracts for March sales were likely finalized in January and February before mortgage rates began to rise sharply. Going forward, the housing market is likely to cool off somewhat as mortgage rates are now above 5%, with home sales in the state expected to decline by 5-10% from last year’s pace.
Home sales prices, however, continue to trend upwards but at slower rates of growth. The statewide median sales price gained 13.4% year-over-year in March, down from 18.7% in February. As demand slows, price growth is expected to moderate to the 8-10% range.
Rising home prices are largely a result of very limited inventory. Listings in the state increased 6.3% from the record low of 7,434 in February, but are down almost 20% from one year ago. Months of supply declined to 1.1, a record low, with the prior low of 1.2 reached in June 2021.
Sales: According to the Alabama Association of REALTORS, March home sales in the state decreased 1.2% year-over-year (Y/Y) from 7,024 to 6,938 closed transactions. Following seasonal trends, sales increased 30.5% from February. Sales are up 0.7% year-to-date. Two more resources to review: Quarterly Report and Annual Report.
For all statewide housing data, click here.
Inventory: March listings (7,905) increased 6.3% from February and decreased 18.7% from one year ago. At the current sales pace, all the active inventory on the market would sell in 1.1 months, down from 1.4 in February and down from 1.4 months in March 2021. The equilibrium point where buyers and sellers have roughly equal bargaining power is 6 months of supply.
Pricing: The statewide median sales price in March was $232,172, an increase of 2.2% from February and an increase of 13.4% from one year ago. 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 March averaged 46 days on the market (DOM), 19 days faster than one year ago.
Forecast: March sales were 341 units, or 5.2%, above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 6,597 sales for the month while actual sales were 6,938 units. ACRE forecast a total of 16,556 sales in the state year-to-date, while there were 17,162 actual sales through March, a difference of 3.7%.
New Construction: The 1,030 new homes sold represent 14.8% of all residential sales in the state in March. Total sales increased 25.5% from February and decreased 4.8% from one year ago. The median sales price was $318,455, an increase of 1.1% M/M and an increase of 15.1% Y/Y. New homes sold in an average of 39 days, 18 days faster than March 2021.
National Summary: According to the National Association of Realtors (NAR), existing home sales declined in March, falling 2.7% from February (seasonally adjusted annual rate). Three of four regions of the country reported month-over-month declines while sales in the West were unchanged. Home sales also declined 5.8% year-over-year.
The median sales price for all housing types was $377,300, rising 15.0% year-over-year and marking 121 consecutive months of year-over-year gains. Rising home prices are largely a result of low housing inventory amid sustained demand. Existing home inventory totaled 950,000 listings at the end of March, up 11.8% from February 2021 and down 9.5% from 1.05 million listings one year ago. March’s 2.0 months of supply (MOS) increased from 1.5 during February but is down slightly from 2.1 one year ago.
Lawrence Yun, chief economist for NAR said, “The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power. Still, homes are selling rapidly, and home price gains remain in the double-digits.”
Yun also said that he expects rates to continue rising, leading to a 10% reduction in home sales this year. Yun forecasts that home prices will readjust to 5% growth rates. He added, “Home prices have consistently moved upward as supply remains tight. However, sellers should not expect the easy-profit gains and should look for multiple offers to fade as demand continues to subside.”
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The Alabama Residential Monthly Report is developed in connection with the Alabama Association of Realtors.