TUSCALOOSA, Ala. – After declining sharply in July, the Alabama housing market was back on track in August, according to figures from the Alabama Real Estate Research and Education Center at The University of Alabama.
Statewide, existing home sales were up 8.2 percent from the previous month to 5,790, but still down slightly from June.
“In order to keep these numbers in perspective, it should be noted that existing home sales set an all time record in June when 6,032 units were sold,” said Dr. Leonard Zumpano, director of the UA center. “So far this year 40,979 homes have been sold compared to 40,307 through the first eight months of 2005.”
Existing home prices in Alabama also rose slightly in August after dropping in July. Last month was the first time this year home prices fell. The average selling price rose to $161,132 in August, up a little more than $3,500 compared to August of last year. Year-to-date home prices are up $9,600.
The supply of homes on the market in Alabama continues to increase, up 267 units from last month to 34,745. At the current rate of sales, this represents a six-month month supply of homes, up from the 4.7 month supply in August of 2005, when the number of homes for sale was only 26,712. There were more than 8,000 more units on the market this August than in August of last year. The average days on the market decreased to 107 days in August as opposed to 115 days on the market in July.
Seventeen of the 21 areas tracked by the Alabama Real Estate Research and Education Center reported an increase in total homes sold for August, while only four reported a decrease. The number of areas reporting an increase in home prices was not as large with 13 of the 21 areas reporting an increase in average selling price.
The housing market did not look so positive at the national level in August. Existing home sales continued falling in August, the fifth consecutive month, dropping by 0.5 percent to an annual rate of 6.30 million units sold. National existing home sales are now down by 12.6 percent compared to August of last year. The median price for previously owned homes also fell in August to $225,000, the first price decline in 11 years. In August of last year the median price was $229,000.
Nationwide, the inventory of used homes continued to rise, up in August to 3.92 million units. At the current rate of sales it would take 7.5 months to sell all these units.
New home sales at the national level rose slightly to 1.05 million units in August, up from a revised figure of 1.01 million new homes sold in July. The original July number was 1.07 million units sold, and it is possible this August number will be revised as well, Zumpano noted. The total of new homes on the market decreased in August, as did the median price of new homes. The median price of a new home in August was $237,000, representing a 1.3 percent decline from the price level in August 2005.
Housing starts, an indicator of future housing market activity, dropped by 6.0 percent in August, a much larger drop than analysts had expected, according to Zumpano. The number of housing starts for August, 1.665 million, is the lowest number since April 2003, according to the Commerce Department.
“Where the housing market is headed over the near term is a topic of much debate,” Zumpano said. “A pattern of falling prices is expected for the next few months due to the continuing rise in inventory. As Ian Shepherdson, chief economist with High Frequency Economics said, ‘With inventory still rising, there is no chance of any short-term relief. Prices and volumes have a long way to fall yet.’”
In contrast, the National Association of Realtors said it expected this price correction and stabilizing sales should result in price increases as early as the beginning of 2007. NAR is also keeping a positive attitude about the decline in existing home sales, noting that the constant sales numbers this month indicate that the market is operating at a “more sustainable pace.”
“At the center, we expect further sales and price erosion through the end of the year, but we think most of the downward adjustments will occur in those markets that had previously experienced very high rates of price appreciation during the previous 5 years,” Zumpano said. “The market in Alabama, where the increase in home prices has been moderate but steady, will probably remain relatively stable, buttressed somewhat by the recent decline in mortgage interest rates, a robust state economy, and strong job market.
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 for offering a high-quality, cost-effective education.
Editor’s note: Chart accompanies release
Tara Rich, research scholar, contributed to this report.
Contact
Bill Gerdes, UA Business Writer, 205/348-8318, bgerdes@cba.ua.edu
Source
Dr. Leonard Zumpano, professor of finance, chair of real estate and director, Alabama Real Estate Research and Education Center, 205/348-8988