TUSCALOOSA, Ala. — Housing affordability in Alabama showed signs of improvement in early 2026 as both mortgage rates and home prices edged lower.
A new report from the Alabama Center for Real Estate (ACRE) indicates that the Alabama Housing Affordability Index (AHAI™) increased 5.2% in the first quarter of 2026 compared to the previous quarter. The gain in affordability was driven by a slight decline in the median home sales price, a drop in mortgage interest rates, and rising incomes.
The statewide median home price fell 0.3% from $279,126 in Q4 2025 to $278,178 in Q1 2026. At the same time, the average 30-year fixed mortgage rate decreased from 6.23% to 6.11%, helping ease borrowing costs for prospective homebuyers.
Rising incomes also contributed to improved affordability. Alabama’s median family income increased 3.6% year-over-year in 2026, outpacing the national increase of 2.5%, according to the U.S. Department of Housing and Urban Development.
On a year-over-year basis, Alabama’s affordability index rose 7.0% from the first quarter of 2025. Nationally, affordability also improved, with the U.S. index climbing 9.6% over the same period. Despite this growth, housing in Alabama remains more affordable than the national average.
Regional Highlights:
- 11 of Alabama’s 12 metro areas experienced gains in affordability compared to the previous quarter.
- Decatur was the only metro area to see a slight decline, with affordability decreasing 0.9%.
- Florence-Muscle Shoals ranked as the most affordable metro area in the state, followed by Decatur and Anniston-Oxford.
- Among non-metro areas, four of five regions posted increases in affordability, while Monroe County saw a notable decline of 10.8%.
Statewide Affordability Snapshot: Alabama’s AHAI score for Q1 2026 was 138. This indicates that a median-income family earning $89,500 has approximately 1.38 times the income needed to purchase the state’s median-priced home, assuming standard lending conditions and a 20% down payment.
Most and Least Affordable Markets:
Most Affordable Metro Areas:
- Florence-Muscle Shoals (AHAI: 165)
- Decatur (158)
- Anniston-Oxford (155)
Least Affordable Metro Areas:
- Daphne-Fairhope-Foley (119)
- Auburn-Opelika (124)
The AHAI measures the relationship between a region’s median family income and the income required to afford a median-priced home. A score of 100 indicates that a household earning the median income has just enough purchasing power to qualify for a mortgage. Scores above 100 reflect greater affordability.
The index is based on data from Freddie Mac’s Primary Mortgage Market Survey, median family income estimates from the Department of Housing and Urban Development, and median sales prices reported to the Center by local boards/associations of REALTORS® or their multiple listing service.
About The University of Alabama: As the state’s flagship university, The University of Alabama leads in research, education, and service. With nearly 200 academic programs and more than 30 research centers, UA drives innovation and supports economic development across Alabama and beyond. The university is part of The University of Alabama System and is recognized globally for its commitment to excellence.
