Statewide Summary: Home sales in the state declined in September as escalating mortgage rates softened buyer demand. Sales declined 15.0% year-over-year and are down 7.4% year-to-date. Buyer demand has pulled back to pre-covid levels with September sales up slightly (2.3%) 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 September with the statewide median sales price rising 10.5% Y/Y, down from an average of 15.2% from January-August 2022. The statewide median sales price increased 0.4% from August. Going forward, slowing sales and rising inventory are likely to result in home price growth moderating to the 8-10% range by year end.
Inventory increased slightly from August but is up significantly (30.1%) from September 2021 when elevated demand drove inventory down to a near record low. However, inventory is still relatively scarce as the 14,370 properties listed for sale is 25.5% below the 5-year average. Unsold inventory was at 2.4 months of supply, well below the equilibrium point of 4-5 months of supply.
Sales: According to the Alabama Association of REALTORS, September home sales in the state decreased 15.0% year-over-year (Y/Y) from 6,965 to 5,921 closed transactions. Following seasonal trends, sales decreased 6.7% from August. Sales are down 7.4% year-to-date. Two more resources to review: Quarterly Report and Annual Report.
For all statewide housing data, click here.
Inventory: September listings (14,370) increased 3.2% from August and increased 30.1% from one year ago. At the current sales pace, all the active inventory on the market would sell in 2.4 months, up from 2.2 in August and up from 1.6 in September 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 September was $242,935, an increase of 0.4% from August and an increase of 10.5% 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 September averaged 40 days on the market (DOM), 3 days faster than one year ago.
Forecast: September sales were 578 units, or 8.9%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 6,499 sales for the month while actual sales were 5,921 units. ACRE forecast a total of 58,402 sales in the state year-to-date, while there were 56,502 actual sales through September, a difference of 3.3%.
New Construction: The 905 new homes sold represent 15.3% of all residential sales in the state in September. Total sales increased 25.7% from August and decreased 4.4% from one year ago. The median sales price of $355,110 represents an all time high, rising 7.2% from August and 19.7% year-over-year. New homes sold in an average of 39 days, 8 days slower than September 2021.
National Summary: According to the National Association of Realtors (NAR), existing home sales declined 1.5% from August (seasonally adjusted annual rate), marking the eighth consecutive month of slowing sales activity. Three of four regions reported year-over-year declines and home sales slowed 23.8% from September 2021’s pace.
The median sales price for all housing types increased 8.4% Y/Y to $384,800, the 127th 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 19 days, 2 days faster than one year ago. Inventory is slowly trending upwards from the lows seen during the post-pandemic housing boom. The 1,250,000 listings at the end of September represent a decrease of 2.3% from August and up slightly (0.8%) from September 2021. September’s 3.2 months of supply (MOS) was unchanged from August and up from 2.4 one year ago.
Lawrence Yun, chief economist for NAR said, “The housing sector continues to undergo an adjustment due to the continuous rise in interest rates, which eclipsed 6% for 30-year fixed mortgages in September and are now approaching 7%. Expensive regions of the country are especially feeling the pinch and seeing larger declines in sales.”
Yun added that inventory remains tight, historically speaking, saying, “Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory. The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”
All-cash sales represented 22% of all closed sales in September, down from 24% in August 23% one year ago. Second-home buyers and individual investors purchased 15% of September home sales, down from 16% in August but up from 13% one year ago.
Foreclosures and short sales accounted for approximately 2% of September transactions, a slight increase from 1% in the prior month and one year ago.
Click here to view the entire monthly report.
The Alabama Residential Monthly Report is developed in connection with the Alabama Association of Realtors.
