Statewide Summary: Home sales in the state declined in July as rising mortgage rates sidelined some potential buyers. Sales declined 18.2% year-over-year and are down 5.6% year-to-date. Buyer demand has pulled back to below pre-Covid levels with July sales 4.8% below the 5-year average. Additional declines are likely in the months ahead, with a 5-10% slowdown expected from last year’s pace.
Home sales price growth moderated in July with the statewide median sales price rising 13.4% Y/Y, down from an average of 16.0% during the first half of the year. Following a slight pullback in June (down 0.3% month-over-month), the statewide median sales price reached an all-time high of $247,706 in July. 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 July with statewide listings rising 8.1% from June and 24.7% from one year ago. Inventory is still relatively tight as the 13,897 properties listed for sale is 30.9% below the 5-year average of 20,120. Unsold inventory was at 2.2 months of supply, up from 1.5 one year ago.
Sales: According to the Alabama Association of REALTORS, July home sales in the state decreased 18.2% year-over-year (Y/Y) from 7,601 to 6,217 closed transactions. Following seasonal trends but to a greater extent, sales decreased 13.3% from June. Sales are down 5.6% year-to-date. Two more resources to review: Quarterly Report and Annual Report.
For all statewide housing data, click here.
Inventory: July listings (13,897) increased 8.1% from June and increased 24.7% from one year ago. At the current sales pace, all the active inventory on the market would sell in 2.2 months, up from 1.8 in June and up from 1.5 in July 2021. The equilibrium point where buyers and sellers have roughly equal bargaining power is 4-5 months of supply.
Pricing: The statewide median sales price in July was $247,706, a record high and an increase of 2.2% from June 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 July averaged 35 days on the market (DOM), a record low and 8 days faster than one year ago.
Forecast: July sales were 1,088 units, or 14.9%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 7,305 sales for the month while actual sales were 6,217 units. ACRE forecast a total of 44,929 sales in the state year-to-date, while there were 22,236 actual sales through July, a difference of 1.5%.
New Construction: The 846 new homes sold represent 13.6% of all residential sales in the state in July. Total sales decreased 15.7% from June and increased 2.3% from one year ago. The median sales price increased 1.1% from June to a record high of 345,560, an increase of 15.0% year-over-year. New homes sold in an average of 26 days, 4 days faster than July 2021.
National Summary: According to the National Association of Realtors (NAR), existing home sales declined for the sixth consecutive month in July, falling 5.9% from June (seasonally adjusted annual rate). All four regions of the country reported month-over-month declines. Sales decreased 20.2% year-over-year.
The median sales price for all housing types increased 10.8% Y/Y to $403,800, the 125th consecutive Y/Y gain. Properties sold in an average of just 14 days, the fastest pace on record. Inventory is slowly trending upwards from the lows seen during the post-pandemic housing boom. The 1,310,000 listings at the end of July increased 4.8% from June and equal to one year ago. July’s 3.3 months of supply (MOS) increased from 2.9 during June and 2.6 one year ago.
Lawrence Yun, chief economist for NAR said, “”The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June. Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers.”
Yun also commented on overall market conditions saying, “We’re witnessing a housing recession in terms of declining home sales and home building. However, it’s not a recession in home prices. Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price.”
All-cash sales represented 24% of all closed sales in July, down 1% from the prior month and up from 23% one year ago. Second-home buyers and individual investors purchased 14% of July home sales, down from 16% June and up from 15% one year ago.
Foreclosures and short sales accounted for approximately 1% of July transactions, essentially unchanged from June 2022 and July 2021.
Click here to view the entire monthly report.
The Alabama Residential Monthly Report is developed in connection with the Alabama Association of Realtors.