Sales: According to the Multiple Listing Service of the Shoals Area Association of Realtors, there were 195 residential sales in the Shoals area during March, up 25 percent from the same month in 2017. March 2018 residential sales are the highest they have been in the last 10 years, while the March trough was in 2014 with 96 total sales. Two more resources to review: Quarterly Report and the Annual Report.
For all Shoals-area real estate data, click here.
Forecast: March’s 195 home sales were 42 units or 27.5 percent above the Alabama Center for Real Estate’s monthly forecast. ACRE forecasts a total of 1,688 residential sales in the Shoals area during 2018; there were 1,723 actual sales during 2017.
Supply: Shoals area housing inventory totaled 832 units, a decrease of 12.9 percent from one year ago. March’s inventory has declined 30.5 percent from the 10-year peak of 1,197 listings in March 2011. March inventory decreased 5.8 percent from the previous month.
Demand: March sales in the Shoals area increased 69.6 percent from the prior month’s total of 115 sales. This is consistent with historical data from 2013-17 indicating that March sales on average increase 29.4 percent from February. Homes selling in the area during March averaged 87 days on the market, selling 13 days faster than one year ago. The five-year days-on-market average is 123 days for the month of March.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of housing supply. The market equilibrium, or balance between supply and demand, is considered by most real estate professionals to be approximately 6 months. The Shoals area has 4.3 months of housing supply, down from 6.1 months one year ago. In other words, at the March sales pace, it would take 4.3 months to absorb the current inventory for sale.
Pricing: The Shoals area median sales price in March was $135,000, a 22.2 percent increase from March 2017’s median sales price of $110,500. The median sales price was down 3.2 percent from the prior month. This trend goes against historical data trends that indicate the March median sales price on average (2013-17) increases 1.3 percent from January. Pricing can fluctuate from month to month as the sample size of data (closed transactions) is subject to seasonal buying patterns. ACRE recommends contacting a local real estate professional for additional market pricing information.
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 Shoals Area March Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.