November Sales Down but 2004 Still on Track for Another Record, According to UA Real Estate Center

TUSCALOOSA, Ala. – Existing home sales in Alabama slipped slightly during November, down 256 units from the previous month, to 3,954, according to the Alabama Real Estate Research and Education Center at The University of Alabama.

October was the first month since June in which a home sales increase was recorded, according to figures from the center. Although sales were down in November, existing home sales were up 18.5 percent compared to November 2003, and Alabama’s housing market is still on track to set another record for 2004. On a year-to-date basis, Alabama’s housing sales are up 15.7 percent from last year at this time.

During November, the average number of days a house was on the market rose slightly from 132 to 139. During the same period the total number of homes listed for sale in Alabama fell from 24,845 to 24,111. At the current sales rate, this represents a 6.1 month supply of homes in Alabama, a slight increase over the 5.9 month supply in October. On a year-to-date basis, however, the supply of existing homes is down 3.8 percent.

Alabama’s average selling price rose 5.3 percent from $130,387 in October to $137,294 in November. With the exception of October, existing home prices have risen steadily since July, according to the center. Average selling price is currently 15.1 percent higher than it was in November 2003.

“While this does not bode well for housing affordability in the fourth quarter, it does suggest that the housing demand remains quite strong and supply tight,” said Dr. Leonard V. Zumpano, director of the center and professor of finance.

Within Alabama, existing homes sold increased in eight of the areas tracked by the research center, decreased in 12 of the areas, and remained unchanged in one area. Average selling price rose in 10 of the areas tracked by the research center and fell in the remaining 11 reporting areas. Covington County, Dothan, Gadsden, Marshall County, and the Wiregrass have each surpassed their highest average selling price for the year.

In the southern region, existing home sales rose 1.8 percent from 2,780,000 in October to 2,830,000 in November (on an annualized, seasonally-adjusted basis). November’s existing home sales represent a 15.5 percent increase compared to November 2003. The South’s average selling price rose by 2.3 percent from $166,200 in October to $170,000 in November. November’s average selling price is 10.1 percent higher than the average selling price of November 2003.

Nationally, according to the National Association of Realtors (NAR), the number of existing homes sold rose 2.7 percent from 6,760,000 last month to 6,940,000 in November (on an annualized, seasonally-adjusted basis). Existing home sales are 13.2 percent higher this November than in November 2003. The national average selling price rose 1.5 percent from $185,400 to $188,200 during November, which was 10.4 percent higher than the same time last year.

The market for new homes also showed some signs of weakness at the national level. During November the National Association of Home Builders reported that new home sales were down almost 12 percent from October, to 1,125,000 units sold. New home prices also declined in November to $268,000 compared to $282,900 in October. In Alabama, McGraw-Hill Construction reported that new residential construction spending fell to the lowest level so far this year to $268,427,000 in November.

While the housing market in both Alabama and the U.S. will probably finish the year in record territory, Zumpano said there are some signs that the market may slow during 2005.

“Very strong home price appreciation and slowly rising mortgage interest rates have caused housing affordability to decline as we ended the year. With the expectation that these trends will continue into the new year, we look for the housing markets to remain strong in 2005, but below the record levels we have seen in the three previous years,” Zumpano said.

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.

Alan J. Lloyd, research assistant, contributed to this report.