ACRE Commentary: New home sales slipped in September as rising mortgage rates and home prices have priced some buyers out of the market. Nationwide sales decreased 10.9% from August to a seasonally adjusted annual rate of 603,000 and decreased 17.6% from one year ago. Sales in Alabama increased 25.7% from August but declined 4.4% from September 2021. New home sales in the state are slightly below pre-pandemic levels as September sales were 2.7% below the 5-year average. Declines of 10-15% are likely by year end as the effects of rising mortgage rates and economic uncertainty continue to unfold.
National new home prices trended back up in September after retreating slightly in August. The median sales price of $470,600 represented a gain of 8.7% from the prior month and 13.9% from one year ago. Annual price growth has moderated significantly from the 15-20% gains during the pandemic housing boom.
New home prices in Alabama were also on the rise in September, gaining 7.2% month-over-month and 19.7% year-over-year. Going forward, price growth is expected to moderate to 8-10% by year end as sales activity slows and inventory gradually rises.
Alabama’s new home market is nearing equilibrium with 3.8 months of supply in September. The national market, on the other hand, is oversupplied with 9.2 months of supply. A balanced market will have between 4-5 months of new home supply.
Sales: According to the Alabama Realtors, new home sales in September (905 closed transactions) increased 25.7% from August but decreased 4.4% from one year ago. New homes represented 15.3% of all residential sales in Alabama during September, up from 13.6% from one year ago.
Inventory: New home listings (3,478) increased 27.8% from August and 111.3% from one year ago. At the current sales pace, all the active inventory on the market would sell in 3.8 months, unchanged from August and up from 1.7 in September 2021. The equilibrium point where buyers and sellers have roughly equal bargaining power is 4-5 months of supply.
Pricing: The median sales price for new construction in September was $355,110, an increase of 7.2% from August and 19.7% 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.
New homes sold in September averaged 42 days on the market (DOM), 11 days slower than one year ago.
National Overview: According to the U.S. Census Bureau, new home sales nationwide were at a seasonally adjusted annual rate of 603,000 in September. This represents a 10.9% decrease from the revised August rate of 677,000 and is 17.6% below the September 2021 estimate of 732,000.
The median sales price for new homes ($470,600) increased 8.7% from August and increased 13.9% from September 2021.
Supply of new homes was estimated at 462,000 listings (seasonally adjusted) in September, an increase of 1.1% from the prior month and an increase of 17.3% from one year ago. Months of supply also increased from 6.1 one year ago to 9.2 in September 2022.
Click here to view the entire monthly report.
Monthly New Home Sales Data: Athens, Baldwin County, Birmingham, Calhoun County, Gadsden, Huntsville, Lee County, Marshall County, Mobile, Montgomery, Morgan County, Tuscaloosa, and the Wiregrass region.
The Alabama New Construction Monthly Report is developed in connection with the Alabama Association of Realtors.
Additional Resources: Database of building permits and housing starts for all Alabama Counties and metro areas.
