Click here to view or print the entire monthly report compliments of the ACRE Corporate Cabinet.

Sales: According to the Montgomery Area Association of Realtors’ Multiple Listing Service, Montgomery-area residential sales totaled 274 units during February, an increase of 6.6 percent from February 2017’s total of 257 residential sales. Existing single-family homes accounted for 87 percent of all residential sales, while newly constructed homes were 13 percent. Additional resources to review are the Quarterly Report and the Annual Report.

Forecast: Closed transactions during February were 40 units or 13.3 percent below the Alabama Center for Real Estate’s monthly forecast. ACRE projected 608 year-to-date sales in the area, while there were 513 actual sales through February.

Supply: The Montgomery-area housing inventory in February was 1,966 units, a decrease of 10.7 percent from February 2017 and 42 percent below the 10-year February inventory peak reached in 2008 (3,391 total listings). February inventory in the Montgomery area increased 0.6 percent from the prior month. This direction is consistent with historical data indicating February inventory on average (2013-17) increases 1.5 percent from January.

Demand: February residential sales increased 14.6 percent from the prior month. This trend is consistent with historical data indicating that February sales on average (2013-17) increase from January by 8.7 percent. Listings that sold in the Montgomery area during February averaged 118 days on the market, an increase of 7.3 percent from the same month last year. The five-year days-on-market average for February is 127 days.

Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of supply. Many real estate professionals consider 6 months of housing supply to be the equilibrium point, with buyers and sellers having equal bargaining power. There were 7.2 months of housing supply during February, down from 8.6 months of supply one year ago and down from 8.2 months of supply in January.

Pricing: The Montgomery-area median sales price in February was $137,650, up 7.5 percent from February 2017’s median sales price of $128,000. The median sales price decreased 5 percent from the prior month. This trend contrasts with historical data (2013-17) indicating that the February median sales price on average increases from January by 1.9 percent. 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: 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.

The Montgomery Area Residential Monthly Report is developed in conjunction with the Montgomery Area Association of Realtors to better serve River Region consumers.