Welcome to the Alabama Residential Real Estate Index™ (AL RREI). The AL RREI measures residential real estate expectations for the upcoming quarter gathered from a broad group of professionals working in residential real estate and related fields. Six key indicators create a composite index of overall market conditions and an outlook for the state’s metropolitan areas. Through the survey, panelists can take the pulse of the state’s residential real estate market as well as compare their own forecasts to those of their peers.

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3rd Quarter 2023 AL RREI Report

Index above 50 indicates a positive outlook.
Index below 50 indicates a negative outlook.

Slightly Negative Overall Forecast in Q3 2023

The Alabama Residential Real Estate Index (AL RREI™) is a quarterly survey of residential brokers, sales agents, affiliates (loan officers, title agents, bankers, appraisers, etc.), and other industry professionals that measures market expectations for the upcoming quarter. An index value of 50 indicates a neutral outlook. Scores below 50 indicate a negative forecast while scores above 50 indicate a positive outlook. 

In the Alabama Center for Real Estate’s inaugural survey, the Q3 2023 RREI™ registered as slightly negative at 48.9. Being just under 50, Alabama real estate professionals are mildly confident that the real estate market will worsen this upcoming quarter, with five of the six component indexes having a majority of responses indicating “worse” or “no change.” The only component to have a positive outlook this quarter was listings.

Statewide Component Index Analysis

• Alabama Market Outlook: According to the Alabama panelists, statewide market conditions are likely to improve with mild confidence, registering at a mildly confident 52.9.

• United States Market Outlook: Conversely, industry professionals anticipate with moderate confidence the United States residential market will worsen this quarter with an index score of 44.9.

• Interest Rates: With an index score below 50 (41.6), participants anticipate with moderate confidence interest rates will worsen (increase) during the third quarter.

• Sales: The index score of 51.3 indicates that industry professionals predict with mild confidence that home sales will increase in the third quarter. Panelists are almost evenly divided in their sales forecast for the third quarter. Around 30% of respondents expect sales to decrease while 34% forecasted an increase. However, there’s a slight edge toward a neutral outlook as more than 36.5% of respondents believe there will be no change in sales in Q3 2023.

• Listings: With 43.1% of panelists anticipating a higher number of listings in the third quarter, the index registered at a moderately confident 55.3.

• Sales Price: With that juxtaposition between the forecasts for increased interest rates and an increased number of listings, respondents are mildly confident that sales prices will decrease during the coming quarter with an index of 47.6.

Auburn-Opelika Leads in Metro Confidence

Confidence in the residential real estate market varied by metro in the Q3 2023 survey.

Auburn-Opelika was one of three metro markets with a positive outlook in the RREI™ and had the highest marks of any Alabama metro with an index of 53.6. Five of the six component indexes for the metro were positive, which was the most of any metro. Area respondents are especially confident that the Alabama market will improve with an index of 62.5, which was notably the highest metro component index recorded in the third quarter survey. The only negative component index for the metro was sales, which registered a moderately negative index of 43.8.

Birmingham-Hoover was second-highest with an index of 51.5. Four of the six component indexes for the metro were positive. Similar to respondents in Auburn-Opelika, responses from the Birmingham metro were especially confident in the Alabama market improving, tallying an index of 55.7. Area respondents were also moderately confident that listings will increase in Q3 2023, recording an index score of 59.1. The metro registered two negative indexes as participants were moderately confident interest rates will increase (worsen) with an index score of 44.3. Participants were mildly confident sales prices would decrease this upcoming quarter, tallying an index score of 46.6.

Daphne-Fairhope-Foley (51.4) third, respectively, also recorded index scores above 50 indicating mild confidence in a positive outlook for the third quarter. Just like the Birmingham-Hoover metro area, respondents in Daphne-Fairhope-Foley had an optimistic outlook on the market as four of the six component indexes were positive. Listings and sales were the metro’s highest index scores with a 58.3, indicating with moderate confidence that both component indexes will continue to increase. Its lowest index was the US market (38.9) where respondents indicated with strong confidence that the nationwide residential real estate market will get worse in Q3 2023.

Like the statewide average, Huntsville came in just under the neutral mark with an RREI™ of 48.9, reflecting mild confidence in a negative forecast for the metro area. Respondents from the metro area had a positive outlook on just three of the six component indexes. The highest index score for the metro was the listings (58.0) as participants were moderately confident in more homes being listed in the upcoming quarter. Interest rates, on the other hand, was the metro’s lowest index score with a 39.8, as participants were strongly confident that rates will worsen (increase).

Tuscaloosa’s RREI™ was also mildly negative at 48.5 and was the only metro in the state to not have a positive outlook in any of the six component indexes. Instead, participants expect that the statewide market, the national market, sales, and listings will remain the same in Q3 2023. The metro also recorded two negative indexes as participants were mildly confident sales prices will decrease, recording a 47.7. Interest rates was the metro’s lowest index score with 43.2, indicating that participants are moderately confident they will increase (worsen) this upcoming quarter.

Montgomery was the sixth-highest RREI™ in the state, recording an index score of 47.9, reflecting mild confidence in a negative forecast this coming quarter. Respondents from the metro area had a positive outlook on just two of the six component indexes. The metro tallied a 55.0 index score in the listings and sale prices, indicating that participants are moderately confident that both entities will increase this upcoming quarter. Montgomery’s lowest index score was in the US market outlook, interest rates, and sales where it tallied a 42.5, indicating that respondents were mildly confident that all three will worsen.

Mobile had the lowest index score of the metro areas in Alabama with a 47.1, indicating a mildly negative outlook on the residential real estate market this upcoming quarter. Despite the low RREI™, the metro had the highest index score for listings in the state with a 61.5. The mark shows that participants were strongly confident that listings will increase in Q3 2023. The metro also recorded an index score of 36.5 in interest rates, meaning participants are strongly confident that rates will increase (worsen).

Participants from non-metropolitan areas had the lowest RREI™ in the upcoming quarter with a mildly negative score of 45.9. Participants in non-metro areas tallied an index score of 51.4 in the statewide market outlook, indicating they were mildly confident that the Alabama market would improve this coming quarter. Similar to Mobile and Huntsville, respondents had a strongly negative outlook (36.8) when it came to interest rates. Additional markets will be added as sufficient sample size is reached.

Negative Outlook by Majority of the Industry

This quarter, only one of the six industry groupings had a positive outlook on the market, as the “all other respondents” (other industry) recorded a 53.2. With an index above 50, the respondents expressed mild confidence that the statewide residential real estate market would improve in the coming quarter.

Residential sales professionals came in second with an index of 49.4, expressing mild confidence that the residential real estate market would worsen this upcoming quarter. Residential brokers had a slightly negative viewpoint of the market, falling 0.5 points below the statewide average with an RREI™ of 48.4.

Affiliates, a group that includes loan officers, title agents, bankers, and appraisers, had the lowest index of the industry groupings, tallying 43.9 this quarter.

Data was not available for home builders as there were not enough responses to calculate a statistically significant index score. However, ACRE anticipates increased participation in the fourth quarter survey.