ALABAMA REAL ESTATE JOURNAL

Alabama home sales decrease 35.5% year-over-year in December

Statewide Summary: Home sales in the state posted year-over-year declines for the seventh consecutive month in December, falling 35.5% from one year ago. Annual sales declined 12.6% from 2021 when low interest rates and shifting buyer preferences contributed to the pandemic housing boom. Buyer demand has pulled back to below pre-covid levels with December sales down 20.0% from the 5-year average. 

Home sales price growth moderated in December with the statewide median sales price rising 1.7% Y/Y, down from an average of 13.6% from January-November 2022 and falling below 5% for the first time since December 2019. The statewide median sales price decreased 0.1% from the prior month, the second consecutive month-over-month decline. Going forward, slowing sales activity is expected to slow price growth to the 2-4% range during 2023. 

Following seasonal trends, inventory decreased 4.9% from November but is up significantly (58.5%) from December 2021 when elevated demand drove inventory down to a near record low. However, inventory is still relatively scarce as the 13,824 properties listed for sale is 17.5% below the 5-year average. Unsold inventory was at 3.2 months of supply, below the equilibrium point of 4-5 months of supply.  

Sales: According to the Alabama Association of REALTORS, December home sales in the state decreased 35.5% year-over-year (Y/Y) from 6,648 to 4,289 closed transactions. Following seasonal trends, sales decreased 2.7% from November. Sales are down 12.6% year-to-date. Two more resources to review: Quarterly Report and Annual Report.

For all statewide housing data, click here.

Inventory: December listings (13,824) decreased 4.9% from November and increased 58.5% from one year ago. At the current sales pace, all the active inventory on the market would sell in 3.2 months, down from 3.2 in November and up from 1.3 in December 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 December was $234,764, a decrease of 0.1% from November but an increase of 1.7% 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.

Homes sold in December averaged 54 days on the market (DOM), 7 days slower than one year ago.

Forecast: December sales were 1,681 units, or 28.2%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 5,970 sales for the month while actual sales were 4,289 units. ACRE forecast a total of 77,176 sales in the state year-to-date, while there were 70,064 actual sales through December, a difference of 8.0%.

New Construction: The 766 new homes sold represent 17.9% of all residential sales in the state in December. Total sales increased 18.6% from November and decreased 32.3%% from one year ago. The median sales price of $333,018 decreased 5.3% from November but increased 3.7% year-over-year. New homes sold in an average of 53 days, 28 days slower than December 2021.

National Summary: According to the National Association of Realtors (NAR), existing home sales declined 1.5% from November (seasonally adjusted annual rate), marking the eleventh consecutive month of slowing sales activity. All four regions reported year-over-year declines and home sales slowed 34.0% from December 2021’s pace. 

The median sales price for all housing types increased 2.3% Y/Y to $366,900, the 130th consecutive Y/Y gain. However, home prices retreated somewhat over the last five months from a record high of $413,800 in June. 

Properties sold in an average of 26 days, 7 days slower than one year ago. Inventory declined 13.4% from November but the 970,000 properties listed for sale represents an increase of 10.2% from one year ago. December’s 2.9 months of supply (MOS) was down from 3.3 in November and up from 1.7 one year ago.

Lawrence Yun, chief economist for NAR said, “December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates. However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.”

Yun added that price growth has slowed, saying, “Home prices nationwide are still positive, though mildly. Markets in roughly half of the country are likely to offer potential buyers discounted prices compared to last year.”

All-cash sales represented 28% of all closed sales in December, up from 26% in November and 23% one year ago. Second-home buyers and individual investors purchased 16% of December home sales, up from 14% in November but down from 17% one year ago. 

Foreclosures and short sales accounted for approximately 1% of December transactions, essentially unchanged from 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.

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