Home Sales in State Drop Again in October, UA’s Real Estate Research and Education Center Reports

TUSCALOOSA, Ala. — After two consecutive record setting months in July and August, home sales in Alabama decreased again in October, down 8.9 percent from September, according to the Alabama Real Estate Research and Education Center at The University of Alabama.

For the second straight month Alabama has seen a decline in the number of homes sold. Although home sales have been on a decline, Alabama is still up 21.5 percent year-to-date through October 2003. Average selling price decreased 3.5 percent to $118,521 while supply increased again to 6.8 months. Statewide year-to-date average selling price is $124,340, up 4.5 percent over October 2002, which is about a 3.8 percent appreciation on an annual basis.

At the national level, the National Association of REALTORS® (NAR) reported that the number of existing homes sold decreased 4.9 percent in October to 6.35 million units on an annualized, seasonally adjusted basis. Median selling price increased to $172,400, an increase of .3 percent compared to September 2003, but has increased 8.2 percent since October 2002. Supply increased to 4.6 months in October from 4.3 months in September. The number of new homes also decreased 3.5 percent in October, but is up 10.0 percent from October 2002.

Residential construction spending at the national level increased 2.2 percent in October to $484.1 billion on a seasonally adjusted, annual basis, according to the U.S. Census Bureau. The Consumer Price Index, the most popular gauge of inflation, remains unchanged from September at 185.0 as tracked by the Bureau of Labor Statistics, although it is up 2.1 percent from October 2002. The Producer Price Index for Finished Goods, generally considered a leading indicator for inflation, rose 0.8 percent in October to 144.9. According to these metrics, inflationary pressures still appear to remain in check.

The U.S. employment situation made another gain in October with 126,000 new jobs being created, and data from the two previous months is being revised upward. The revisions have 125,000 jobs created in September and 35,000 jobs created in August. The Commerce Department reported the third quarter Gross Domestic Product at 7.2 percent while the NAR is expecting growth to be above 4 percent over the next two quarters. Alabama’s unemployment rate increased 0.1 percent from the month of September to 5.6 percent in October; which is still a decrease of 0.3 percent from October of last year.

“As the economy picks up steam in the face of a looming and record-setting federal budget deficit and a growing trade imbalance, mortgage rates have begun to rise and will continue to rise through the rest of the year,” said Dr. Leonard Zumpano, director of the Alabama Real Estate Research and Education Center. “The improving economy, however, should lead to continued job growth and the housing market is well positioned for another record setting year at both the state and national levels, absent an unexpected spike in mortgage rates.”

The University of Alabama Culverhouse College of Commerce and Business Administration, founded in 1919, is home to the Alabama Real Estate Research and Education Center. The Center works with the Alabama Association of REALTORS, the Alabama Real Estate Commission and the research division of the National Association of REALTORS to compile a state housing affordability index each quarter.