Alabama Real Estate Market Holds Its Own, According to UA’s Real Estate Center

TUSCALOOSA, Ala. – Existing home sales in Alabama increased in December 2006 by 223 homes, or 5.27 percent, over November, with a total of 4,457 units sold compared with November’s 4,234 units, according to the Alabama Real Estate Research and Education Center at The University of Alabama.

December sales were down 5.47 percent compared to December 2005. For the year 2006, total sales of existing homes were down 1.17 percent compared with 2005.

Existing home prices in Alabama dropped by 5.09 percent from November to December 2006, with an average sales price of $154,417. For all of 2006, the average selling price of an existing home in Alabama was $156,370, which is 5.52 percent higher than the average selling price in 2005.

The number of homes listed on the market in Alabama decreased in December 2006 to 34,912, down from the 36,066 homes reported on the market in November. At the current sales pace, this represents a 7.8 month inventory of homes. The total number of homes on the market for 2006 was 400,188, which is a 30.1 percent increase over the 307,514 homes listed for all of 2005.

The average number of days a home was on the market in Alabama decreased in December to 120 days from 126 in November. The average number of days a home was on the market in all of 2006 was 123, a seven-day decrease in the 130 average for days a home was on the market in 2005.

Overall, 13 of the 22 areas tracked by the Alabama Real Estate Research and Education Center reported an increase in existing home sales in December, while nine areas reported a decrease. In 2006, 14 areas reported an overall decrease in home sales, which helps explain the home sales decline of 1.17 percent for the entire state for the year.

Overall, 13 of the 22 areas reported a decrease in average selling price in December 2006 compared to November, one (Selma) remained the same, and eight reported an increase in selling price. However, 16 of the 22 areas reported an overall increase in average selling price for 2006 compared with 2005.

At the national level, existing home sales declined by only 0.8 percent between November and December 2006 to 6.22 million units. The National Association of Realtors released this statistic to illustrate that existing home sales have not moved dramatically up or down in the past five months. NAR reports that the worst of the housing market slump is over. The median existing home price rose for the first time in four months in December to $222,000, the same median sales price reported for the nation in December 2005.

According to NAR, the preliminary annual figures for 2006 have the national existing home sales declining by 8.4 percent from 2005 to an average of 6.48 million units sold, the largest annual decline since 1989.

The national inventory of previously owned homes on the market fell by 302,000 units listed in December to 3.51 million. Because of this downturn in inventory, the sales pace now represents a 6.8 month supply of homes, which is the lowest supply in six months.

Nationally, new home sales rose by 4.8 percent in December to 1.12 million units sold. For the year, new home sales fell by 17.3 percent compared with 2005, and prices rose by 1.8 percent. The inventory of new homes on the market fell for the fifth consecutive month to 537,000 homes, which represents a 5.9 month supply.

December housing starts rose again to 1.642 million units, a 4.5 percent increase over November. However, housing starts in December 2006 were still 18 percent lower than December 2005.

Looking at the year-end statistics, the Alabama housing market survived 2006 well despite the housing market struggles throughout the nation, according to Suzanna Allaway, a real estate resource specialist at the UA center. According to historical data, Alabama experienced a drop in existing home sales between 1999 and 2000 by approximately 3.0 percent, and the decline of 1.17 percent from 2005 to 2006 should not be alarming given the national situation.

More economists are agreeing with NAR analysts that the national housing market has at least begun to stabilize, Allaway said.

“Demand for housing has increased during the last few months of 2006, but there is still room for improvement,” she said. “Most economists agree that housing starts need to fall further to clear out the inventory of homes and to stabilize home prices.”

Editor’s note: Chart accompanies release

Tara Rich, faculty scholar, contributed to this report.