Sales: According to the Mobile Area Association of Realtors, Mobile-area residential sales totaled 306 units during February, a increase of 15.5 percent from the same month in 2017, when there were 265 residential sales. Current results are 13.1 percent above the five-year monthly average of 271 closed transactions. Two more resources to review: Quarterly Report and Annual Report.
Forecast: February sales in the Mobile area were 13 units or 4 percent below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 319 total sales during February, while there were 306 actual sales during the month. ACRE’s year-to-date forecast projected 606 sales in the area through February, while there were 549 actual year-to-date sales.
Supply: The Mobile-area housing inventory in February was 1,583 units, a decrease of 15.8 percent from February 2017. Inventory has declined 54.2 percent from the 10-year February peak of 3,457 units reached in 2010. The five-year average for the area during February is 2,413 listings.
Demand: February sales increased 25.9 percent from January. This is consistent with historical data indicating that February sales on average (2013-2017) increase 5.8 percent from January. Homes selling in the area during February averaged 100 days on the market, an increase of 13 days from the days-on-market average from the same month in 2017. Homes sold 11 days faster than the five-year February average of 111 days on the market.
Seeking balance: The inventory of homes for sale divided by the current monthly sales volume equals the number of months of housing supply. Most real estate professionals consider the market to be in balance at approximately 6 months of housing supply. The Mobile area currently has 5.2 months of housing supply, down from 7.1 months during the same period in 2017. The five-year average for the month of February is 8.9 months of housing supply.
Pricing: The Mobile-area median sales price in February was $145,000, an increase of 12.4 percent when compared to the median sales price from this time last year. The February median sales price decreased 2 percent from the previous month. This drop in median price from the previous month contrasts with historical data, which indicate that February median sales prices on average (2013-2017) increase 9.2 percent from January. Pricing can fluctuate from month to month as the sample size of data is subject to seasonal buying patterns. ACRE highly recommends consulting with a local real estate professional to discuss prices, which can vary from neighborhood to neighborhood.
Industry perspective: The 10-year treasury is a crucial indicator of economic expansion. As of March 1, 2018, the 10-year treasury stood at 2.88 percent, a slight increase from last month’s rate of 2.86 percent. Mortgage rates also experienced a slight increase recently as the current rate on a 30-year fixed-rate mortgage is 4.57 percent, up from 4.38 percent one month ago. As the economy continues to strengthen, people will have more money in their pockets with the intent to spend. This increase in spending will most likely create higher stock prices and lower bond prices. With this increase of confidence in the market, mortgage interest rates can be expected to increase.
The National Association of Home Builders (NAHB) produces economic analyses of the home-building industry based on government data. The Housing Market Index (HMI) depicts market conditions for the sale of new homes. The HMI ranges from 0 to 100; a rate greater than 50 represents good sales conditions.
The HMI in the South has stayed relatively steady in the past few months with a score of 73. However, the HMI is lower in some regions of the United States, such as the Northeast, which has a rate of 56. The West has a higher HMI of 77, and a better market for good housing conditions.
The Federal Housing Finance Agency uses the House Price Index (HPI) to measure the average price changes in repeat sales or refinancing on the same properties. The FHFA’s national HPI was up 6.7 percent from the previous year compared to Alabama, which has increased from the previous year by 5.6 percent. The HPI rose in all 49 states except for Mississippi.
Compared to the national housing market conditions, Alabama’s real estate market has been showing improvement. Although total residential sales in Alabama decreased 2.3 percent from January 2017, the statewide median sales price increased 2.3 percent from January 2017. Statewide, homes in Alabama are selling much more quickly than in recent years as the average days on the market decreased 19.6 percent from one year ago.