TUSCALOOSA, Ala. – Alabama’s housing market started the New Year on the down side, according to the Alabama Real Estate Research and Education Center at The University of Alabama.
Existing home sales in Alabama fell by 21.5 percent from December 2005, down from 4,715 to 3,702 units sold in January. “Although this represents a significant decline, the sales pace in January is still ahead of last year at this time, and 2005 was a record-breaking year for Alabama,” said Dr. Leonard Zumpano, director of the center.
The average selling price in Alabama declined in January by 5.18 percent to a price of $142,522, the fifth straight monthly decline.
The total homes listed in Alabama rose slightly in January to 27,544, but are up about 4,000 units compared to the same time last year. At the January sales pace, this represents a 7.4 month supply of existing homes, a significant increase compared to December’s 5.7 month supply, Zumpano said. The average number of days a house is on the market also increased slightly during the first month of the new year, up three days to 130, indicating that it took, on average, a little more than four months for homes on the market to sell.
Existing home sales declined in 16 of the 21 areas tracked by the Alabama Real Estate Research and Education Center, leaving only five areas reporting an increase in home sales for January. Out of the 21 areas, 14 reported a decrease in average selling price for January, while the remaining seven locations reported an increase in home prices.
At the national level, the National Association of Realtors® (NAR) reported existing home sales fell for the fifth consecutive month to 6.56 million units sold. The January sales number represents the slowest sales pace since February of 2004 and is down almost 10 percent from the record pace set in June of last year.
The South was the only region in the country that reported an increase in existing home sales during January.
The national median home price remained unchanged from the previous month at $211,000; so too did the average selling price at $261,000. The NAR also reported that housing inventory rose nationally to 2.91 million units available for sale, representing a 5.3 month supply of existing homes. This represents an increase in supply of 2.4 percent from December and an almost 36.0 percent increase compared to January 2005.
New home sales also declined nationally, down by 5.0 percent to 1.23 million units sold. The national median price for new homes rose slightly to $238,100. The inventory of new homes for sale rose again in January to a 5.2 month supply. Housing starts, an indicator of the future housing supply, increased in January by 14.5 percent to 2.28 million units, the fastest rate in 30 years.
“Though seasonal factors may be part of the explanation for falling prices and declining home sales, it appears that the housing sector is slowing down as we move into 2006,” Zumpano said. “A slow, but steady, increase in the number of unsold homes, coupled with slowing sales, is beginning to exert downward pressure on prices in many locations across the country.”
Some economists are now suggesting that the market, once characterized by tight supplies of homes, has become a buyer’s market, Zumpano said. “Other analysts are saying that supply has simply caught up with demand. Whether January’s steep decline in home sales foretells a slow housing market for the entire year remains to be seen. By historical standards the housing market remains strong, although it is increasingly unlikely that we will see double digit increases in home prices over the coming year,” he said. “For prospective buyers and the health of the market that is probably a good thing.”
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.
Editors 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