Statewide Summary: Home sales in the state declined in October as escalating mortgage rates softened buyer demand. Sales declined 23.4% year-over-year and are down 8.9% year-to-date. Buyer demand has pulled back to below pre-covid levels with October sales down 12.6% 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 October with the statewide median sales price rising 11.4% Y/Y, down from an average of 14.6% from January-September 2022. The statewide median sales price increased 1.7% from September. 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 September but is up significantly (40.1%) from October 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 20.9% below the 5-year average. Unsold inventory was at 3.1 months of supply, below the equilibrium point of 4-5 months of supply.
Sales: According to the Alabama Association of REALTORS, October home sales in the state decreased 23.4% year-over-year (Y/Y) from 6,350 to 4,863 closed transactions. Following seasonal trends but to a greater degree, sales decreased 17.9% from September. Sales are down 8.9% year-to-date. Two more resources to review: Quarterly Report and Annual Report.
For all statewide housing data, click here.
Inventory: October listings (14,878) increased 3.5% from September and increased 40.1% from one year ago. At the current sales pace, all the active inventory on the market would sell in 3.1 months, up from 2.4 in September and up from 1.7 in October 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 October was $247,105, an increase of 1.7% from September and an increase of 11.4% 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 October averaged 44 days on the market (DOM), 1 days faster than one year ago.
Forecast: October sales were 1,298 units, or 21.1%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 6,160 sales for the month while actual sales were 4,863 units. ACRE forecast a total of 64,562 sales in the state year-to-date, while there were 61,365 actual sales through October, a difference of 5.0%.
New Construction: The 680 new homes sold represent 14.0% of all residential sales in the state in October. Total sales decreased 24.9% from September and decreased 19.3% from one year ago. The median sales price of $338,688 decreased 4.6% from September and increased 15.1% year-over-year. New homes sold in an average of 38 days, 13 days slower than October 2021.
National Summary: According to the National Association of Realtors (NAR), existing home sales declined 5.9% from September (seasonally adjusted annual rate), marking the ninth consecutive month of slowing sales activity. All four regions reported year-over-year declines and home sales slowed 28.4% from October 2021’s pace.
The median sales price for all housing types increased 6.6% Y/Y to $379,100, the 128th consecutive Y/Y gain. However, home prices retreated somewhat over the last four months from a record high of $413,800 in June.
Properties sold in an average of 21 days, 2 days slower than one year ago. Inventory is slowly trending upwards from the lows seen during the post-pandemic housing boom. The 1,220,000 listings at the end of October represent a decrease of 0.8% from September and October 2021. October’s 3.3 months of supply (MOS) was up from 3.1 in September and up from 2.4 one year ago.
Lawrence Yun, chief economist for NAR said, “More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher. The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years.”
Yun added that inventory remains tight and contributed to almost one-fourth of October listings selling above list price. He said, “Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers. In October, 24% of homes received over the asking price. Conversely, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8%.”
All-cash sales represented 26% of all closed sales in October, up from 22% in September and 24% one year ago. Second-home buyers and individual investors purchased 16% of October home sales, up from 15% in September but down from 17% one year ago.
Foreclosures and short sales accounted for approximately 1% of October transactions, down from 2% in September and unchanged from 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.