TUSCALOOSA, Ala. – The Alabama housing market declined significantly in September after a strong showing in August, according to the Alabama Real Estate Research and Education Center at The University of Alabama.
Existing home sales in Alabama dropped to 4,766 in September, a 17.8 percent decline from August. Compared to September ‘05, sales are down 12 percent. Through the first nine months of 2006, existing home sales are still slightly ahead of last year with 45,855 homes sold year-to-date in 2006, compared to 45,742 homes sold through the first nine months of 2005.
“September was only the second month this year that existing home prices fell in Alabama, down 1.9 percent from August,” said Dr. Leonard V. Zumpano, director of the center. “July was the only other month this year in which home prices fell.”
The average selling price in September dropped to $158,076, which is still $2,123 more than the average price in September of last year. Year-to-date existing home prices in Alabama remain considerably higher than 2005’s year-to-date prices, according to the center. Through the first nine months of 2005, existing home prices averaged $146,994, compared to $155,382 through September of ‘06.
The inventory of previously owned homes listed on the market in Alabama rose again in September to 36,414 units, a 2.9 percent increase from August. There were more than 9,000 more homes listed this September than in September 2005. At the current rate of sales, this represents a 7.6 month supply of homes, a significant increase from the six-month supply in August and the five-month supply of homes in September 2005, according to the center.
The average days for a home to be on the market increased to 113 days in September – still 10 days fewer than the average from September of last year. The softening housing market was felt almost statewide, Zumpano said.
Zumpano said 19 of the 22 areas tracked by the Alabama Real Estate Research and Education Center reported a decrease in the number of homes sold in September with only two areas, Cherokee and Walker counties, reporting increases in sales; in Selma home sales were unchanged from the previous month.
Cherokee County housing statistics were formerly included and reported with the Gadsden Metropolitan Area. Beginning this month, however, Cherokee County will be listed as a separate reporting area. Fifteen of the 22 areas reported a decrease in average selling price, while seven reported an increase.
The national housing market told a similar story in September. Existing home sales fell in September – the sixth consecutive month of diminishing sales. Home sales dropped to 6.18 million units sold, representing a decline of 1.9 percent from August to September and the lowest sales pace since January 2004.
Nationally, existing home sales in September were 14.2 percent lower than sales in September 2005. The median price for existing homes fell for the second month in a row in September to $220,000.
The national inventory of homes dropped in September to 3.75 million units. At this sales pace, the supply of homes is 7.3 months with analysts at the National Association of Realtors® believing the inventory of homes may have already hit its peak.
Nationally, new home sales actually rose again in September to 1.075 million units sold; however, the year-to-date new home sales in 2006 are 17 percent lower than the year-to-date figure for last year. The national new home median price fell in September to $217,100. This figure represents a 9.7 percent decrease in prices since September 2005, the sharpest year-to-year decline in more than 30 years, according to the Commerce Department.
The supply of new homes on the market declined by 2 percent in September to 557,000 units. Somewhat surprisingly, Zumpano said, housing starts, which usually indicate future housing market activity, increased in September by 5.9 percent to 1.772 million units.
“Certainly, people are divided over whether the market is simply starting to stabilize or if the worst is yet to come,” Zumpano said. David Lereah, NAR’s chief economist, has said the worst is actually over and that sales should normalize “in the wake of the unsustainable boom that we saw last year.” Thomas Stevens, NAR’s president shares this optimistic view, saying, “A stable sales pace is expected to draw down the number of listings to a supply balance that will support positive price growth within a few months.”
The American public does not seem as optimistic about the housing market. According to a USA Today/Gallup poll, about half of the American homeowners who had intended to sell their homes in the past year have delayed listing their homes, and one-third of those polled have completely abandoned the idea.
USA Today, however, also reported that about one-third of the nation should expect moderate price growth for the remainder of the year in locations where previous price appreciation has been moderate, including Birmingham. Most economists believe it is too soon to predict how harsh the decline in the national housing market will be.
The New York Times quoted Dottie Herman, chief executive of a real estate company in New York, saying, “Everybody here is just guessing. And it depends on whose guess you want to listen to.”
Although the Alabama housing market is showing signs of slowing, some of this can be attributed to seasonal factors, according to Zumpano. “Home sales and prices normally tend to moderate as we approach the latter part of the year; children are back in school, the days are growing shorter, and the holidays are approaching.
“The fundamentals for a strong year for housing are still in place; record low unemployment, a robust economy and moderating gas prices and interest rates. Considering that 2005 was a record year for housing in Alabama, current housing statistics suggest we could well end the year near the levels reached in 2003 and 2004, also record years for housing in Alabama,” 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 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