Sales: According to the North Alabama Multiple Listing Service, a total of 443 residential units were sold during January in Huntsville/Madison County. Sales in the area have increased 10.8 percent from the same time last year. Current sales results are 35.7 percent above the five-year January average of 326 total units sold. Two more resources to review: Quarterly Report and Annual Report.
For all of Huntsville’s area housing data, click here.
Forecast: Closed transactions in January were 22 units or 5.2 percent above the Alabama Center for Real Estate’s monthly forecast. ACRE projected 421 residential sales in the Huntsville metro area during January. ACRE forecasts 7,212 total sales in the area for 2018; there were 6,996 actual sales in 2017.
Supply: The Rocket City’s housing inventory totaled 1,823 units, a decrease of 19.9 percent from last January. A total of 545 newly constructed homes were listed for sale in the area during January, while there were 557 on the market this time last year.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of supply. The market is considered to be at equilibrium at approximately 6 months, with a balance between supply and demand. The inventory-to-sales ratio in January was 4.1 months of housing supply, up from 3.3 months in December and down from 5.7 months in January 2017.
Demand: Residential sales in January decreased 22.1 percent from December. Historical data indicate that January residential sales on average (2013-17) decrease 22.9 percent from December. New home sales made up 25 percent of all residential sales. Existing single-family home sales accounted for 72 percent of all sales, while condo sales made up the remaining 3 percent.
Pricing: The median sales price in the Huntsville area during January was $189,000, an increase of 11.2 percent from January 2017. The median price declined 7.8 percent from the previous month. This is consistent with historical data (2013-17) indicating that January median sales prices on average decrease by 9 percent from December. Pricing can fluctuate as the sample size of data is subject to seasonal buying patterns. ACRE recommends contacting a local real estate professional to discuss pricing at the neighborhood level.
Industry perspective: The recent headlines in the real estate world have revolved around rising interest rates. As of Jan. 31, the interest rate on a 30-year fixed-rate mortgage was 4.38 percent. This is up from 4.18 percent on Jan. 10 and up from 4.08 percent on Dec. 6, 2017. The stock market has rebounded somewhat from its large selloff on Friday, Feb. 2, and Monday, Feb. 5, as investors adjust from an accommodating monetary policy to one with some inflation and higher interest rates. The recent market decline is a signal of a return to normalcy and higher debt costs. Rising interest rates, however, do not cause housing activity to come to a halt, in the same way that rising rates do not cause businesses to go into hibernation. In the spring of 2006, the Federal Reserve stopped raising interest rates after raising rates 16 times over a three-year period. The economy was performing well during this time (2004-2005) of rising interest rates. The Great Recession happened, interestingly enough, at a time when interest rate increases were halted.
Home ownership rates increased to 64.2 percent during 2017 after falling to a post-1965 low of 62.9 percent in 2016. Not surprisingly, home ownership rates peaked during 2005 at approximately 69 percent. Millennial home ownership rates are also on the rise as their employment situations continue to improve. Millennials, in fact, have been recently credited with an improvement in suburban housing markets as not all are city dwellers. This rise in home ownership was highlighted recently at the annual TrendLines 2018 program in Washington, D.C., with an analysis of Census Bureau housing data presented by Sage Policy Group, Delta Associates and Transwestern. The following excerpt is from the closing paragraph from the home ownership report, and is encouraging news for residential real estate markets across the nation:
“This year, the most common age in America will be 26 years old. There is also an abundance of 25- and 27-year-olds. All of these people are millennials, America’s largest and most educated generation. As more of this demographic block marches into their 30s, demand for ownership opportunities will rise. While there may be downturns that occasionally suspend these demographics, the next decade stands to emerge as a period of rapidly expanding home ownership and single-family homebuilding in America.”
The Huntsville/Madison County Residential Monthly Report is developed in conjunction with the Huntsville Area Association of Realtors to better serve North Alabama consumers.