Wiregrass region home sales decrease in May from one year ago

Sales: According to the Wiregrass Board of Realtors, May residential sales decreased 13.4% year-over-year from 142 to 123 closed transactions. Following seasonal trends, sales decreased 9.6% from April. Sales are down 0.8% year-to-date. Two more resources to review: Quarterly Report and Annual Report.  

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Inventory: May listings (129) increased 18.4% from April and decreased 13.4% from one year ago. At the current sales pace, all the active inventory on the market would sell in 1.0 months, up from 0.8 months in April and equal to one year ago. The equilibrium point where buyers and sellers have roughly equal bargaining power is 4-6 months of supply.

Pricing: The area’s median sales price in May was $199,900, an increase of 10.1% from one year ago and a decrease of 3.6% from April. 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 May averaged 36 days on the market (DOM), 40 days faster than May 2021.

Forecast: May sales were 11 units, or 9.5%, above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 112 residential sales for the month, and actual sales were 123 units sold. ACRE forecast a total of 540 sales in the area year-to-date, while there were 616 actual sales through May, a difference of 14.0%.

Statewide Summary: Home sales in the state rebounded in May, rising 1.9% from one year ago even as mortgage rates and home sales prices continue to trend upwards. Housing demand remains well above pre-covid levels with May sales 14.3% above the 5-year average. However, the housing market is likely to cool off somewhat as mortgage rates are now above 6%. Home sales in the state are expected to decline by 5-10% from last year’s pace by year-end. 

Home sales price growth accelerated in May with the statewide median sales price rising 17.4% Y/Y, up from 16.2% in April and 13.7% in March. The statewide median and average sales prices also reached record highs in May ($242,568 and $294,324). Going forward, slowing sales and rising inventory are likely to result in home price growth moderating to the 8-10% range. 

Much-needed inventory arrived in May with statewide listings rising 11.0% from April and 18.9% from one year ago. Inventory is still relatively tight as the 11,129 properties listed for sale is 44.2% below the 5-year average of 19,950. Unsold inventory was at 1.6 months of supply, up from 1.3 one year ago. 

National Summary: According to the National Association of Realtors (NAR), existing home sales declined for the fourth consecutive month in May, falling 3.4% from April (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 8.6% year-over-year. 

The median sales price for all housing types passed the $400,000 mark for the first time ever ($407,600), rising 14.8% year-over-year and marking 123 consecutive months of year-over-year gains. Rising home prices are largely a result of low housing inventory amid sustained demand and inflationary pressures. Existing home inventory totaled 1,160,000 listings at the end of May, up 12.6% from the prior month and down 4.1% from 1.21 million listings one year ago. May’s 2.6 months of supply (MOS) increased from 2.2 during April and 2.5 one year ago.

Lawrence Yun, chief economist for NAR said, “Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance. Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.”

Yun also said that he expects declining home sales in the months ahead. “Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year. Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.” 

All-cash sales represented 25% of all closed sales in May, down from 26% during the prior month and up from 23% one year ago. Second-home buyers and individual investors purchased 16% of May home sales, down from 17% in April and 17% one year ago. Foreclosures and short sales accounted for less than 1% of May transactions, unchanged from April 2022 and May 2021.  

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The Wiregrass Residential Monthly Report is developed in conjunction with the Wiregrass Board of Realtors to better serve area consumers.