State Housing Market on Track for Another Record, UA Center Stats Indicate

TUSCALOOSA, Ala. – The Alabama housing market is on track for another record setting year if the March 2002 sales pace is an accurate barometer.

According to figures compiled by the Alabama Real Estate Research and Education Center at The University of Alabama, total homes sold jumped 18.5 percent to 3,090 units as compared with 2,608 in February. The average selling price actually fell 3.6 percent to $117,576 in March from $121,971 in February, as did the average number of days on the market, which fell to 144 days from 167 days. The number of homes available for sale increased slightly in March to 27,580 units from 27,010 the previous month.

The center reported several records as well. Baldwin County reported its highest number of homes sold in one month in March with 292 units. This compares with 198 homes sold in February. Gadsden and Lake Martin also set records for the highest number of homes sold in one month with 85 and 35 homes sold, respectively.

Last, but not least, Dothan reported it’s second highest average selling price at $132,002. The highest average selling price reported for Dothan was $137,168 in June of 1999, another record setting year.

“All of these signals indicate that the housing market moved right along from February 2002 to March 2002,” said Dr. Leonard Zumpano, director of the center. “A better indicator of housing market trends, however, is to compare year-to-date figures. Again, these numbers indicate another record setting pace for 2002.”

Zumpano said the number of homes sold year-to-date in March 2002 is 7.1 percent above March of 2001 at 7,977, as compared with 7,452. Average selling price is also up year-to-date at $118,384, a 3.8 percent increase over March 2001’s figure of $113,329. The average number of days on the market is up 3.2 percent to 162 days in March 2002 as compared with 157 days in March 2001.

The 81,291 figure reported for the number of homes available for sale in March of 2002 may not indicate such a drastic increase over the 57,372 figure reported for March of 2001, Zumpano said.

“This is due to the fact that Birmingham did not begin reporting the number of homes available for sale until March of 2001. Birmingham typically reports well over 6,000 homes listed for sale in any given month. If it is assumed that the area had only 6,000 homes available for sale in both January and February of 2001, then the 2001 year-to-date number for the state jumps to 75,997, a conservative estimate,” he said.

“This brings 2002’s 81,291 number within 7 percent of the estimated 2001 figure, not a large disparity given the conservative estimate for the number of homes listed in Birmingham for 2001.”

The center’s numbers show residential construction spending in Alabama, which is considered a leading indicator of housing activity, was down 3.2 percent in March 2002 relative to March of 2001 at $616 million from $636 million, respectively. Construction figures are collected from F.W. Dodge Reports.

“On a brighter note,” Zumpano said, “the unemployment rate fell to 5.0 percent in March from 5.5 percent in February, according to the Alabama Department of Industrial Relations. In fact, the unemployment rate fell in every major metro area except Gadsden in March. Falling unemployment, mild weather and record housing affordability, boosted by low interest rates, low housing prices and rising income, are largely responsible for the healthy pace of the Alabama housing market.”

At the national level, existing home sales fell 8.3 percent in March to a seasonally adjusted annual rate of 5.4 million units, according to the National Association of REALTORS®. The drop is not a surprise nor is it necessarily bad news, Zumpano said.

“It comes on the heels of a very strong sales pace in January and February,” he said. In fact, the March 2002 sales pace is less than 1 percent below the 5.44 million unit pace in March of 2001 and is actually the sixth strongest sales pace ever recorded by the National Association of REALTORS®.

The median sales price did climb 2.4 percent from February’s figure of $149,400 to $153,000 and is up 6.7 percent from March of last year. Housing starts declined 7.79 percent to 1.65 million units in March from 1.79 million units in February.

The decline in housing starts may also not be as negative as it sounds, according to Zumpano. “The drop in March is the first decline in housing starts this year. The first quarter average of 1.71 million units is the highest it has been since the fourth quarter of 1998. Construction spending increased for the third consecutive month in February to a seasonally adjusted, annual rate $879.4 billion, a 1.1 percent increase.

“Residential construction spending accounted for most of the increase in the overall figure as spending on both office and hotel construction fell. Consumer confidence did drop 1.7 percent in April to 108.8 from 110.2 while unemployment increased to 5.7 percent from 5.5, despite a decrease in jobless claims. Again, these figures are historically strong even with the month-to-month decline.”

The Alabama Real Estate Research and Education Center is part of The University of Alabama’s Culverhouse College of Commerce and Business Administration. The UA business school, founded in 1919, has been recognized repeatedly during the 1990s for offering a high-quality, cost-effective education.

Note: Morgan County and Huntsville combined their reported housing figures in March. In order to make comparisons to February, January and all of 2001, a weighted average was used to combine the figures for the beginning of 2002 and all of 2001. Weights were derived based on the average percentage of homes sold by each area in the beginning of 2002 and all of 2001.