State Housing Market Sets Another Record in August, According to UA Center Statistics

TUSCALOOSA, Ala. – The Alabama housing market set another record in August with 3,901 homes sold, 1.8 percent above July’s revised figure of 3,832 homes sold. The revised figures reflect the inclusion of the Enterprise market, which had not been included in earlier releases because of reporting problems, according to a spokesman for the Alabama Real Estate Research and Education Center (AREREC) at The University of Alabama.

The average selling price for a home in Alabama increased 5.99 percent to $122,472. Both the average days a home remained on the market and total homes available for sale remained relatively unchanged at 146 days and 28,012 units, respectively.

The increase in sales during August, however, caused the time it would take to exhaust the supply of homes to decrease to 7.18 months in August from 7.31 months the previous month. The time is calculated using the current sales pace.

According to Dr. Leonard Zumpano, AREREC director, Alabama’s housing sector appears to be on its way to yet another record setting year. The total number of homes sold so far this year is up 8.86 percent to 26,528 units through August 2002 as compared to 24,368 units through August 2001. Average selling price is up less than one percent to $118,564 from $117,783 in 2001.

Zumpano said the total number of homes listed appears to be up about 10.15 percent so far this year, even without the Birmingham listing numbers, which were not reported the first two months of 2001.

Zumpano said five state records have been established. Enterprise, Lake Martin and Marshall County all posted the greatest number of homes sold in one month since the center began tracking the areas. Calhoun County and Montgomery posted the highest average selling price ever recorded for the respective areas. Only seven of the 20 reporting areas posted declines in the number of homes sold from July to August while only one area, Calhoun County, reported a decrease in average selling price.

The state unemployment rate, a key influence on the housing market, remained at 5.7 percent in August, according to the Alabama Department of Industrial Relations. Residential construction in the state rose to $237.4 million, or up 1.6 percent from July, according F.W. Dodge reports. Construction is up just under one percent so far this year over last.

“In contrast to the national construction trend, this is the third straight month of residential construction gains for Alabama, offering no obvious signs of a slowdown for the state housing market,” Zumpano said.

At the national level, sales of existing, single family homes fell 1.7 percent to 5.28 million units in August, according to the National Association of REALTORS® (NAR). At the same time the Commerce Department reported that new home sales were up during the same period.

The median selling price rose to $163,600, up less than one percent from July 2002, but up 6.4 percent from August 2001. Zumpano said that considering the current sales pace, a historically thin five-month supply of homes is likely helping keep upward pressure on home prices.

For the U.S., the decline in home sales, though modest, comes at the same time new home construction has declined for the third consecutive month. Housing starts fell 2.19 percent to 1.61 million units on an annualized basis. Any number over 1.6 million is historically very strong, Zumpano said.

As a comparison, housing starts totaled 1.6 million in 2001, a very strong year for home construction. The downward trend in construction coupled with the decline in existing home sales, however, may indicate that a general cool down has arrived for the housing sector.

“However,” Zumpano said, “home sales are by no means weak. In fact, the four highest sales months as recorded by the National Association of Realtors are January, February, April and May of 2002. Even with a general slowdown in the second half of the year to more sustainable levels, the NAR is forecasting that a record 5.44 million homes will be sold by the end of 2002.”

New home sales set a record in August with 996,000 units, which represents a 1.9 percent increase over July. The downward trend in construction, however, suggests that new home sales could decline in the coming months.

Zumpano pointed out that the nation’s unemployment rate fell to 5.7 percent due to the four consecutive months of employment gains following a year of heavy job cuts. Long-term mortgage rates continued to fall, hitting 6.05 percent for the average, conventional 30-year mortgage for the week that ended Sept. 20, 2002, down from 6.29 percent in August.

The continued decline in mortgage rates and the improving employment situation should help keep the housing market vibrant for the last half of 2002, Zumpano said.

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.