TUSCALOOSA, Ala. — State leaders in the residential real estate industry continue to expect an overall slowdown of market activity during Q4 2023, according to the latest quarterly survey by The University of Alabama.
Why it matters: The Alabama Center for Real Estate’s (ACRE) survey registered a score of 43.8 for Q4 2023. This indicates that real estate professionals across the state forecast an overall contraction of residential market activity. The Q4 index is 5.1 points below the Q3 2023 RREI™, indicating a continuation of the contractionary forecast, but a shift from mild confidence in Q3 to moderate confidence in Q4. The United States market outlook (40.2), however, indicates strong confidence in overall slowing market activity nationwide.
By the numbers:
- Interest Rates: The Q4 2023 index of 41.6 was unchanged from the prior quarter. Panelists were moderately confident that interest rates would worsen (rise) during the fourth quarter. More than half of panelists (51%) expect interest rates to worsen (rise) in Q4.
- Sales: With a Q4 2023 index of 42.1, survey participants are strongly confident that home sales will decrease in Q4 from Q3. This indicator declined 9.2 points from the Q3 2023 index. More than half of panelists (52.3%) expect sales to decline in Q4.
- Listings: With a Q4 2023 index of 46.1, survey participants are mildly confident that listings will decrease in Q4 from Q3. This indicator also declined 9.2 points from the Q3 2023 index. 38.7% of panelists expect listings to decrease in Q4.
- Sales Prices: With a Q4 2023 index of 47.9, survey participants are mildly confident that sales prices will decrease in Q4 from Q3. This was the only indicator to increase from Q3, rising 0.3 points. 41.3% of panelists expect no change in sales prices in Q4.
What they’re saying: “Going forward, the big question is how long will interest rates continue to trend upwards, and when will the moderation of rates occur. Not surprisingly, more than half of panelists surveyed expect interest rates to rise in Q4,” ACRE Associate Director Stuart Norton said.
Norton added that elevated rates will have the expected effects of slowing sales activity and longer days on market. He continued, “Inventory is likely to remain limited, impacting the forecast for sales prices, with an expectation of a slight increase or no change.”
“It remains a difficult market for buyers, especially those making their first home purchase,” Norton said.
The AL CREI™ and AL RREI™ will be offered once a quarter to be a forward-looking tool for the industry. To become a participant for the fourth quarter, register for the commercial index or the resident index on the ACRE website.
Susannah Robichaux from the Alabama Center for Business and Economic Development assisted in the report through data collection and processing. Senior Graphic Designer at the Culverhouse College of Business, Katie Howard, is credited with the graphic designs in the report.
The University of Alabama, part of The University of Alabama System, is the state’s flagship university. UA shapes a better world through its teaching, research and service. With a global reputation for excellence, UA provides an inclusive, forward-thinking environment and nearly 200 degree programs on a beautiful, student-centered campus. A leader in cutting-edge research, UA advances discovery, creative inquiry and knowledge through more than 30 research centers. As the state’s largest higher education institution, UA drives economic growth in Alabama and beyond.