Statewide Summary: Home sales in the state declined in August as escalating mortgage rates softened buyer demand. Sales declined 11.3% year-over-year and are down 6.4% year-to-date. Buyer demand has pulled back to pre-covid levels with August sales down slightly (-0.5%) from the 5-year average. Additional declines are likely in the months ahead, with a 10-15% slowdown expected from last year’s pace.
Home sales price growth moderated in August with the statewide median sales price rising 11.8% Y/Y, down from an average of 15.6% from January-July 2022. The statewide median sales price declined 2.3% from an all-time high of $247,706 reached in July 2022. Going forward, slowing sales and rising inventory are likely to result in home price growth moderating to the 8-10% range.
Inventory increased slightly from July but is up significantly (24.7%) from August 2021 when elevated demand drove inventory down to a near record low. However, inventory is still relatively scarce as the 13,921 properties listed for sale is 29.4% below the 5-year average. Unsold inventory was at 2.2 months of supply, well below the equilibrium point of 4-5 months of supply.
Sales: According to the Alabama Association of REALTORS, August home sales in the state decreased 11.3% year-over-year (Y/Y) from 7,152 to 6,345 closed transactions. Going against seasonal trends, sales increased 2.1 from July. Sales are down 6.4% year-to-date. Two more resources to review: Quarterly Report and Annual Report.
For all statewide housing data, click here.
Inventory: August listings (13,921) increased 0.2% from July 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, unchanged from July and up from 1.6 in August 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 August was $241,931, a decrease of 2.3% from July and an increase of 11.8% 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 August averaged 38 days on the market (DOM), 1 day slower than one year ago.
Forecast: August sales were 1,088 units, or 14.9%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 6,974 sales for the month while actual sales were 6,345 units. ACRE forecast a total of 51,903 sales in the state year-to-date, while there were 50,581 actual sales through August, a difference of 2.6%.
New Construction: The 720 new homes sold represent 11.3% of all residential sales in the state in August. Total sales decreased 14.9% from July and decreased 17.2% from one year ago. The median sales price of $331,209 represents a decrease of 5.0% from July but an increase of 11.3% year-over-year. New homes sold in an average of 34 days, 9 days slower than August 2021.
National Summary: According to the National Association of Realtors (NAR), existing home sales dipped slightly in August, falling 0.4% from July (seasonally adjusted annual rate), marking the seventh consecutive month of slowing sales activity. All four regions of the country reported year-over-year declines as home sales slowed 19.9% from one year ago.
The median sales price for all housing types increased 7.7% Y/Y to $389,500, the 126th consecutive Y/Y gain. However, home prices retreated somewhat over the last two months from a record high of $413,800 in June.
Properties sold in an average of 16 days, one day faster than one year ago. Inventory is slowly trending upwards from the lows seen during the post-pandemic housing boom. The 1,280,000 listings at the end of August represent a decrease of 1.5% from July and unchanged from August 2021. August’s 3.2 months of supply (MOS) was unchanged from July and up from 2.6 one year ago.
Lawrence Yun, chief economist for NAR said, “The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes. The softness in home sales reflects this year’s escalating mortgage rates. Nonetheless, homeowners are doing well with near nonexistent distressed property sales and home prices still higher than a year ago.”
Yun also shared his outlook for the supply side of the market saying, “Inventory will remain tight in the coming months and even for the next couple of years. Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.”
All-cash sales represented 24% of all closed sales in August, unchanged from July but up from 22% one year ago. Second-home buyers and individual investors purchased 16% of August home sales, up from 14% July and up from 15% one year ago.
Foreclosures and short sales accounted for approximately 1% of August transactions, essentially unchanged from July 2022 and August 2021.
Click here to view the entire monthly report.
The Alabama Residential Monthly Report is developed in connection with the Alabama Association of Realtors.