Sales: According to the Greater Alabama Multiple Listing Service, Birmingham metro-area residential sales totaled 1,413 units during March, representing a 4.1 percent increase from March 2017, when 1,357 homes were sold. Of March’s residential sales, 85 percent were existing single-family homes, while 4 percent were condos and the remaining 11 percent were newly constructed homes. Two more resources to review: Quarterly Report and Annual Report.
For all of the Birmingham area’s housing data, click here.
Forecast: March sales were 90 units or 6.9 percent above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 1,323 total sales for the month, while actual sales were 1,413 units. ACRE’s 2018 sales forecast projects 15,366 closed transactions for the year. There were 14,915 actual sales in the area during 2017.
Supply: The Birmingham-area housing inventory in March totaled 5,367 units, a 13.7 percent decrease from March 2017, and down 55.7 percent from the March peak in 2008 (12,121 units). According to the Greater Alabama MLS, there were 3.8 months of housing supply during March, a 25 percent decrease from the previous month. The “months of housing supply” is a simple calculation – homes listed (supply) divided by homes sold (demand). Generally speaking, the market is in balance at 6 months of supply.
Demand: March residential sales increased 37.1 percent from the prior month. Historical data indicate that March sales on average (2013-17) increase from February by 29.8 percent. Sales closing in March averaged 60 days on the market, a decrease of 14.3 percent from the previous month. Residential sales this time last year averaged 73 days on the market, 13 days above current results.
Pricing: The median sales price in March was $190,000, an increase of 6.1 percent from this time last year. The March median sales price decreased 5 percent from February. This trend is inconsistent with historical data (2013-17), which indicate that the March median sales price on average increases 3.9 percent from February. Pricing can fluctuate from month to month as the sample size of data is subject to seasonal buying patterns. ACRE recommends consulting with a local real estate professional who has access to pricing data at the neighborhood level.
Industry perspective: Interest rates are likely to increase throughout 2018. The Federal Reserve’s Federal Open Market Committee (FOMC) met on March 21 and approved a quarter-point rate hike. As of April 5, the 10-Year Treasury stood at 2.83 percent, down slightly from 2.88 percent one month ago. Although daily yield curve rates have decreased slightly in the past month, many analysts are projecting that the 10-year Treasury will pass 3 percent in the months to come. According to Wells Fargo, the current interest rate on a 30-year fixed-rate mortgage is 4.58 percent (annual percentage rate).
As the overall economy continues to expand, it is not surprising to see growth in Alabama’s residential new construction market. February sales of newly constructed homes grew 22 percent month-over-month and 14 percent year-over-year. Statewide*, there were 507 new construction sales in February, up from 416 total sales in January and up from 445 total sales in February 2017. Year-to-date, new construction sales are up 6 percent from 2017.
February new construction sales in select Alabama markets
- Baldwin County – 100
- Birmingham Metro Area – 125
- Huntsville Metro Area – 112
- Lee County – 36
- Mobile Metro Area – 17
- Montgomery Metro Area – 35
- Tuscaloosa County – 15
New construction building permits and housing starts data are indicators of larger economic conditions. Generally speaking, the housing market is one of the first sectors to expand or contract during times of growth or decline. According to the U.S. Census Bureau, 1,225 building permits for new construction were issued in Alabama during February. Building permits increased 1.1 percent from January, when 1,212 permits were issued, and increased 10.1 percent from February 2017, when 1,113 permits were issued. ACRE projected 1,219 housing starts in Alabama during February. Housing starts decreased 2.9 percent from January (1,256) and increased 13 percent from February 2017 (1,079). Year-over-year increases in both building permits and projected housing starts are encouraging news, as they hint toward continued overall economic growth during the second quarter of 2018.
*ACRE receives new construction sales data from the following counties/areas: Baldwin County, Birmingham Metro Area, Calhoun County, Huntsville Metro Area, Lee County, Mobile Metro Area, Montgomery Metro Area, Tuscaloosa County and the Wiregrass Region. Combined, these counties/areas represent +/- 70 percent of Alabama’s total population.
Click here to generate more graphs from the Birmingham March Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.