Alabama Housing Market Remains Ahead of National Trend, According to Data from UA Center for Real Estate

TUSCALOOSA, Ala. – Although year-to-date existing home sales in Alabama have modestly declined at a rate of 2.38 percent through August, the statewide sales remain ahead of the national existing home sales.

As of July, national existing sales had declined by 9 percent, as reported by the National Association of Realtors. There were 40,617 home sales in Alabama through August, compared to 41,593 in 2006, according to the Alabama Center for Real Estate at The University of Alabama’s Culverhouse College of Commerce.

Sales of existing homes in Alabama for the month of August totaled 5,300 units, continuing a downward trend that began in June. Existing home sales in August declined 4.11 percent, when compared to the prior month, and 8.62 percent when mirrored against August 2006.

From the Center’s perspective, the August totals were of little surprise as Alabama consumers became more cautious as the national spotlight heightened awareness of the tightening credit markets, residential foreclosures and the recent volatility of the stock market.

Locally, students returning to school in early August and extreme temperatures during much of the month were also contributing factors in the sales decline, according to industry practitioners. Even so, Alabama’s monthly home sales ranked third highest on record for the month of August since the Center began compiling data a decade ago.

Eleven of the 23 areas tracked by the Alabama Center for Real Estate reported an increase in total homes sold for August, from the prior month, with the Birmingham area representing the only major metropolitan area to report an increase in home sales (2.30 percent) when compared to July.

In Alabama’s five most populated metropolitan areas (Birmingham, Montgomery, Huntsville, Mobile and Tuscaloosa), sales remained consistent during the first eight months, reporting only an average decline in total home sales versus 2006 of 2.73 percent.

Existing home selling prices in Alabama declined slightly in August following similar results in July. The average selling price lowered to $163,041 in August, representing a $1,124 or .68 percent decline from the prior month. Conversely, the August average selling price, when compared to August 2006, reflected an increase of $1,927 or 1.2 percent. Nine of the 23 areas tracked by the Alabama Center for Real Estate reported an increase in average selling price for August, from the prior month, and more than half reported average selling price increases for August year-over-year.

The supply of Alabama homes on the market in August marginally declined, down 664 units from last month to 43,790. More significant, however, is the comparison versus August 2006, which reflects a significant increase in housing inventory by 8,215 units or 23.79 percent. At the current rate of sales, this represents an 8.62 month supply of homes, up 43.67 percent from the six-month supply in August of 2006, when the number of homes for sale was 35,375.

Of comparable importance, the average days on the market has increased 12.38 percent, climbing to 118 days in August 07 from 105 days on the market during the same period last year.

As the state’s housing market enters the final quarter of the year, the balance between supply and demand of the state’s housing inventory and its affect on home prices will continue to warrant close scrutiny.

On the supply side, the Alabama foreclosure rate, albeit 40th in the nation, continues to rise at an alarming percentage, adding more houses to the market. Although new home construction has slowed significantly, absorption calculations suggest that it will take months before the housing inventory begins to trend toward normal equilibrium levels.

On the demand side, the Center will continue to closely monitor Alabama’s consumer confidence in the housing sector to gauge and monitor notable trends during the months ahead, including consumer reaction to the recent federal funds rate cut of 50 basis points and possible rate cuts during the remainder of the year.

Although the Center anticipates the continued near-term softening in home sales and pricing, the housing market in Alabama should continue to remain ahead of the national trend in most of the local markets as the state continues to attract large-scale development projects and new and expanding industry which translates into the creation of new jobs, the state unemployment remaining below the national average and the continued growth in personal income for the consumers of Alabama.

The Culverhouse College of Commerce and Business Administration was established in 1919, and in 1929, it became the 38th school to earn admission into the American Association of Collegiate Schools of Business. The excellence of the UA business school has been acknowledged on a national level. The undergraduate program is ranked 29th among public universities by U.S. News, and the Culverhouse School of Accountancy is ranked 15th among public universities by U.S. News. The graduate accounting program is ranked 15th and the undergraduate program 14th by Public Accounting Report.

Editor’s note: Chart accompanies release. This information was supplied by Grayson M. Glaze, J.D., executive director, Alabama Center for Real Estate