State Home Sales Continue Downward Trend, According to Numbers from UA’s Alabama Center for Real Estate

TUSCALOOSA, Ala. – Total home sales in Alabama during October reflected the most significant monthly retreat this year by posting a decline of 12.25 percent when compared to October of last year, according to the Alabama Center for Real Estate at The University of Alabama.

“To keep this eye-opening figure in perspective, one must recognize that the preceding October home sales represented the second best on record for the month,” said J. Grayson Glaze, J.D., executive director of the UA center.

October home sales of 4,103 units represent the third consecutive month of declining Alabama home sales when compared to last year’s figures and represent a decrease of 573 home sales when compared to the 4,676 homes sold in October 2006, according to the center. Consistent with the downward trend in demand, the average home selling price in Alabama decreased by 6.76 percent when compared to October 2006 ($150,016 vs. $160,883) and the year-over-year median selling price also declined, although at a lower rate of 1.83 percent.

Glaze said year-to-date home sales in Alabama have declined at a much slower pace of 3.78 percent thru October.

“However this rate will continue to decrease during the fourth quarter,” Glaze said. The statewide results remain ahead of the national year-to-date existing home sales that in September had declined by 10.7 percent, according to the National Association of Realtors.

“The slower pace of home sales has contributed to a rise in the number of homes on the market as the supply of Alabama homes continued to increase throughout the year,” Glaze said. “However, October represents the first month in 2007 that inventory has decreased from the previous month, down 393 units, and while one month does not equate to a trend, the center will continue to monitor this important market indicator as the reduction in excess supply is critical for the market to regain traction. The current housing inventory versus October 2006 reflects a significant increase in year-over-year supply by 7,040 units or 19.23 percent.”

At the current rate of home sales, the October supply of 43,640 represents a 10.64 month supply of homes, up 35.89 percent from the 7.83 month supply in October 2006, when the number of homes for sale was 36,600. “Of similar importance,” Glaze said, “the average days on the market has increased 7.39 percent, climbing to 126 days in October from 117 days on the market during the same period last year.”

As the individual reporting areas are reviewed, Glaze noted 19 of the 23 areas tracked by the Alabama Center for Real Estate reported a decrease in total homes sold for October when compared to last year. The only increases were in Monroe County, Muscle Shoals, Selma and Walker County. Similarly, the only areas that report year-to-date sales gains from the previous year were Cullman, Gadsden, Marshall County, Muscle Shoals, Tuscaloosa and Walker County.

Alabama’s five most populated metropolitan areas (Birmingham, Montgomery, Huntsville, Mobile and Tuscaloosa) experienced their weakest month to date of total sales in October as reflected by a 12.65 percent decline. That is anticipated to continue in the near-term, Glaze indicated. However, he said these five metropolitan areas’ year-to-date home sales reflect a cumulative decline in total home sales, versus 2006, of only 4.11 percent “which speaks to the resilience of Alabama housing market when compared to the national housing conditions.”

Glaze said the following chart is a three-month moving average that represents today’s Alabama real estate market:

“The long-term key to generating stability in the housing market is improved levels of affordability, a correction of the inventory imbalance, and a restoration of consumer confidence in the market place,” Glaze said.

Glaze said the center anticipates the continued near-term weakening in home sales and pricing and expects the total 2007 home sales at year-end will represent a statewide decline of between 5 and 7 percent when compared to the prior year.

“It is important to reiterate in an environment of multiple information outlets and sources that real estate opportunities continue to exist in each local market as the state’s economy continues to grow at a modest but stable rate, the state unemployment remains below the national average, and Alabama consumer’s personal income continues to grow,” Glaze said.

The Alabama Center for Real Estate 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 this report