Home Sales in Alabama Drop in January, According to UA’s Real Estate Center; Drop Typical for New Year

TUSCALOOSA, Ala. – Existing home sales in Alabama experienced a substantial decrease of 20.4 percent from December 2006 to January 2007, according to the Real Estate Research and Education Center at The University of Alabama.

“While this may seem like an alarming start to the new year, January’s home sales of 3,547 units is actually typical for the Alabama housing market at the beginning of each year,” said O. William Evans, interim executive director of the center. “Sales dropped by 19.9 percent from December 2004 to January 2005 to 3,348 units, and 2005 was a record-setting year for the Alabama housing market.”

Existing home prices in the state also fell in January to $150,693, a decline of 2.4 percent. January’s average sales price was 5.7 percent higher than the average sales price in January 2006 and 3.4 percent higher than the sales price in January 2005, according to the center.

The inventory of homes in Alabama increased in January to 36,511 units from 34,912 units on the market in December. This current sales pace represents a large 10.3 month inventory of homes. There were 8,797 more homes listed on the market in January 2007 than in January 2006.

The average number of days a home remained on the market in Alabama increased from December to January by only one day to 121 days on the market. A home was on the market in Alabama for 126 days on average in January 2006.

The majority of the 22 areas tracked by the Alabama Real Estate Research and Education Center experienced a decrease in home sales in January with 15 reporting a decrease and only six reporting an increase. Home sales in one area, Jackson County, remained the same in January.

The areas were almost evenly split regarding average selling price in January. Overall, 12 of the areas reported a decrease in average selling price, and 10 areas reported an increase in January.

Nationally, existing home sales rose in January by 3.0 percent to 6.46 million units. The median existing home price declined in January to $210,600, representing a decrease of 3.1 percent from January 2006.

According to the National Association of Realtors, the revised annual figures for 2006 had home sales at 6.478 million units sold, which represents a decline of 8.5 percent from 2005. The 2006 revised annual figures also reported the national median home price was $221,000, which is 1.0 percent higher than the median price in 2005.

The national inventory of previously owned homes on the market rose by 99,000 units to 3.55 million units listed in January. This sales pace represents a 6.6 month supply of homes.

At the national level, new home sales fell by a significant 16.6 percent in January, representing the lowest sales pace for new homes in four years. The national inventory of new homes on the market fell for the sixth consecutive month to 536,000 homes listed. This sales pace corresponds to a 6.8 month inventory of homes.

Housing starts, which can indicate future housing market activity, fell in January by 14.3 percent to 1.408 million units. This is the lowest level of housing starts for any month in nine years.

“Though the sharp decrease in home sales in Alabama from December to January does not seem positive for the Alabama housing market, it must be taken into perspective,” Evans said. “A decline in home sales from December to January has occurred every year the Alabama Real Estate Research and Education Center has tracked Alabama’s housing data. The decline experienced from 2004 to 2005 was just as dramatic as this year’s decline, and 2005 set records for the state. Therefore, this year still holds potential for the Alabama housing market, and there is much to look forward to.”

The national market is still showing signs of stabilization. Housing starts sharply declined in January, and this will hopefully allow the market to clear out the build-up of the inventory of homes. National demand for existing home sales seems to be continuously increasing, so this year may prove to be a good year for both the Alabama and national housing markets, Evans said.

Editors note: Chart accompanies release

Tara Rich, research scholar, contributed to this report.