September Home Sales Drop but Still Fourth Highest, According to UA Real Estate Center

TUSCALOOSA, Ala. – After two consecutive record setting months, home sales in Alabama slowed in September, down 14.2 percent from August, according to figures compiled by the Alabama Real Estate Research and Education Center at The University of Alabama.

For only the third time this year, Alabama has seen a decline from the previous month in the number of homes sold. The 4,396 homes sold are still the fourth highest on record, making the possibility of another record setting year still extremely high, according to Dr. Leonard Zumpano, director of the center.

Average selling price decreased 9.0 percent to $122,823 while supply increased to 6.2 months in September from 5.4 months in August.

“Year-to-date home sales in Alabama are up 21.4 percent over the same time last year, with all areas now reporting higher year-to-date numbers than last September. Statewide year-to-date average selling price is up 4.6 percent; which is about a 6.1 percent appreciation on an annual basis,” Zumpano said.

Zumpano said there are four records to report for September. Cullman, Gadsden and Selma all set records for the number of homes sold in one month, while Lee County set a record for highest recorded average selling price.

Residential construction spending continued to increase in the state in August, climbing 19.3 percent year-to-date over August 2002 to $2.4 billion, as tracked by F.W. Dodge Reports. The state unemployment rate decreased to 5.5 percent, according to the Alabama Department of Industrial Relations.

At the national level, the National Association of REALTORS® reported that the number of existing homes sold increased 3.6 percent in September to 6.69 million units on an annualized, seasonally adjusted basis, also a new monthly record for the third straight month.

Median selling price declined to $172,300, a decrease of 2.8 percent compared to August of 2003, but has increased 9.1 percent since September of 2002.

“Supply slightly decreased again to 4.3 months in September from 4.6 months in August,” Zumpano said. “All of this data points to a healthy housing sector at the national level. The market for new homes also appears strong as the Commerce Department reported that the sale of new homes are up 8.3 percent over September 2002, but down slightly from the previous month.”

Residential construction spending at the national level increased slightly by 1.5 percent in August, the latest figures available, to $460 billion on a seasonally adjusted, annual basis, according to the U.S. Census Bureau.

The Consumer Price Index, the most popular gauge of inflation, increased 0.3 percent again in September to 185.0 as tracked by the Bureau of Labor Statistics. The Producer Price Index for Finished Goods, generally considered a leading indicator for inflation, rose 0.3 percent in September to 143.8, which suggests that inflation still remains in check.

Mortgage interest rates increased 4.8 percent to 5.95 percent during the month of September, but this didn’t seem to stop home buyers, Zumpano said, pointing out that many homeowners may have been encouraged to purchase the home more quickly to avoid rising interest rates.

“Why the existing housing market in Alabama slowed last month is a mystery, but one month does not make a trend, and year-to-date home sales are still at record levels,” Zumpano said. “With an improving economy, rising consumer confidence, and a recovering stock market, there is no reason to suspect that the state’s housing market will soften this year.”

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.