ACRE Commentary: New home sales nationwide beat expectations in November as mortgage rates retreated somewhat from the highs reached in October. The seasonally adjusted annual rate increased 5.8% from October but sales were down 15.3% year-over-year.
New home sales in Alabama decreased 5.0% from October and declined 17.6% from November 2021. New home sales have fallen below pre-pandemic levels as November sales were 10.8% 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.
The national median sales price declined 4.4% month-over-month to $471,200, down from $493,000 in October. However, new home prices are up 9.6% 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 on the rise in November, gaining 3.8% from the prior month and 13.6% from one year ago. 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 near equilibrium with 5.1 months of supply in November. The national market, on the other hand, is oversupplied with 8.6 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 November (646 closed transactions) decreased 5.0% from October and 17.6% from one year ago. New homes represented 14.6% of all residential sales in Alabama during November, up from 12.7% from one year ago.
Inventory: New home listings (3,293) increased 1.1% from October and 98.3% from one year ago. At the current sales pace, all the active inventory on the market would sell in 5.1 months, up from 4.8 in October and 2.1 in November 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 November was $351,473, an increase of 3.8% from October and 13.6% 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 November averaged 45 days on the market (DOM), 18 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 640,000 in November. This represents a 5.8% increase from the revised October rate of 605,000 but is 15.3% below the November 2021 estimate of 756,000.
The median sales price for new homes ($471,200) decreased 4.4% from October but increased 9.6% from November 2021.
Supply of new homes was estimated at 461,000 listings (seasonally adjusted) in November, a decrease of 1.7% from the prior month but an increase of 18.2% from one year ago. Months of supply also increased from 6.2 one year ago to 8.6 in November 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.