ACRE Commentary: New home sales nationwide ended 2022 with a slight month-over-month gain but were down significantly from 2021. The seasonally adjusted annual rate increased 2.3% from November but sales were down 26.6% year-over-year. During 2022, new home sales decreased 16.4% from 2021 when the pandemic housing boom was in full swing.
Decreasing affordability and rising construction costs also slowed new home sales in Alabama even as price growth softened. New home sales in Alabama increased 18.6% from November but declined 32.3% from December 2021. New home sales have fallen below pre-pandemic levels as December sales were 19.3% below the 5-year average. Sales ended the year down 7.4% from 2021.
The national median sales price declined 3.7% month-over-month to $442,100, down from $459,000 in November. However, new home prices are up 7.8% from one year ago. Annual price growth has moderated significantly from the 15-20% gains during the pandemic housing boom.
New home price growth in the state also moderated in December, falling 5.3% from the prior month and rising just 3.7% from one year ago. Going forward, price growth is expected to stay in the low single digits during early 2023.
Alabama’s new home market is near equilibrium with 4.2 months of supply in December. The national market, on the other hand, is oversupplied with 9.0 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 December (766 closed transactions) increased 18.6% from November but declined 32.3% from one year ago. New homes represented 17.9% of all residential sales in Alabama during December, up from 17.0% from one year ago.
Inventory: New home listings (3,219) decreased 2.2% from November but increased 135.0% from one year ago. At the current sales pace, all the active inventory on the market would sell in 4.2 months, down from 5.1 in November and up from 1.2 in December 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 December was $333,018, a decrease of 5.3% from November but an increase of 3.7% 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 December averaged 53 days on the market (DOM), 28 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 616,000 in December. This represents a 2.3% increase from the revised November rate of 602,000 but is 26.6% below the December 2021 estimate of 839,000.
The median sales price for new homes ($442,100) decreased 3.7% from November but increased 7.8% from December 2021.
Supply of new homes was estimated at 460,000 listings (seasonally adjusted) in December, a decrease of 1.3% from the prior month but an increase of 18.2% from one year ago. Months of supply also increased from 5.6 one year ago to 9.0 in December 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.
