TUSCALOOSA, Ala. – Sales of existing homes in Alabama rose strongly in February, increasing by 329 units, according to figures released by the Alabama Real Estate Research and Education Center at The University of Alabama.
Total homes sold hit 2,608 units, the highest figure recorded for February since the center began tracking the market in 1995. A 2.1 percent decline in the number of homes available for sale from 27,596 to 27,010 units caused supply to fall from 12.1 months in January to 10.4 months in February. “This particular statistic must be handled cautiously, however, since Calhoun County did not report the number of homes available for sale in February,” said Dr. Leonard Zumpano, director of the center. “Calhoun County typically adds 800 or more homes for sale every month, which means that the number of homes available for sale was likely comparable to January.”
Zumpano said February 2002 compares to February of last year. This year, the number of homes sold in February was up 10.8 percent from 2,354 units, while the average selling price of $121,971 was relatively unchanged from February 2001’s figure of $121,455. The number of days on the market was up 11.3 percent from 150 days in February 2001. The total number of homes sold is ahead of this time last year at 4,887 units sold since Jan. 1. This represents a 14 percent increase over the number of homes sold during the same time last year.
“The incredibly strong housing market in Alabama can be directly attributed to a couple factors: Record setting housing affordability and mild weather,” Zumpano said. The Alabama Housing Affordability Index (AHAI) hit 186.7 in the fourth quarter of 2001, the highest it has been in the Center’s seven-year history. An index of 100 means a family earning the state’s median income has just enough buying power to qualify for a mortgage loan on the state’s median priced, single-family home. Higher index numbers represent more affordable housing.
“The dramatic increase in housing affordability can be linked to two factors,” Zumpano said. “Median home prices fell by over $6,000 during the fourth quarter and mortgage interest rates, already low, declined another 35 basis points, averaging 6.71 percent for the period. There is a chance that housing may have become even more affordable in the first quarter of 2002. Although home price data is not available, the state median income rose 1.5 percent to $46,744 from $46,056.”
In other economic news, Alabama unemployment fell to 4.9 percent in February from January’s 5.3 percent rate. In fact, the unemployment rate fell for every major metro area in Alabama except Dothan and Gadsden, according to the Alabama Department of Industrial Relations.
Construction spending, seemingly the only bleak economic news for the state so far this year, fell nearly 44 percent in February to $409 million from $782 million in January, according to F.W. Dodge Reports. Residential construction spending accounted for most of the decline with a 66 percent fall to $133 million from $397 million.
“Wide month-to-month variations are to be expected in construction data, so it is often more useful to compare numbers on a year-to-year basis,” Zumpano said. “Residential spending fell a more reasonable 9 percent in February 2002 from a level of $234 million on February 2001. Construction spending is considered a leading indicator of housing activity, meaning that a decline in residential construction spending could indicate a decline in housing activity in the near future.”
The housing market has continued its record setting pace at the national level as well. While existing home sales fell 2.8 percent to a seasonally adjusted rate of 5.88 million units in February from January’s 6.05 million units, it was still 11.6 percent above February 2001’s figure of 5.27 million units, according to the National Association of REALTORS®.
February’s median selling price of $150,000 remained basically unchanged from January’s figure of $150,300. The median price reflects the typical value, where half of the homes sold for more and half sold for less. With 2.08 million homes available for sale in February, supply remained unchanged at 4.2 months, a historically low level. Construction spending increased 1.5 percent in January to $876.7 billion.
Private, residential construction spending was up only 0.4 percent in January, which precipitated a 2.79 percent increase in housing starts in the month of February to 1.769 million units. New home sales were also up in February to 875,000 units, representing a 5.3 percent increase over January’s figure of 831,000.
“For now, the housing sectors at both the national and state levels remain robust,” Zumpano said. “In fact, the National Association of REALTORS® is predicting that 2002’s home sales pace will be very close to the record setting pace of 2001. Home sales would have to slow from their current pace in order for that to happen, which is exactly what the NAR believes is in store for the housing market as interest rates begin to climb.”
The Alabama Real Estate Research and Education Center, located in the Culverhouse College of Commerce and Business Administration at The University of Alabama, is a state of the art comprehensive research facility designed to support Alabama’s real estate community and the state’s overall economic development efforts.
Source
Dr. Leonard Zumpano, director, Alabama Real Estate Research and Education Center, 205/348-8988