Sales: There were 3,820 residential sales in Alabama during February, an increase of 7.2 percent from one year ago. Current sales results are 17.8 percent above the five-year monthly average of 3,242 transactions. Two more resources to review: Quarterly Report and Annual Report.
Forecast: February sales were 1.8 percent or 72 units below the Alabama Center for Real Estate‘s (ACRE) monthly forecast. ACRE projected 7,303 residential sales statewide year-to-date, while there were 7,144 actual sales through February.
Supply: The statewide housing inventory during February was 23,436 listings, a decrease of 9.9 percent from February 2017 and 42.8 percent below the 10-year February peak in 2008, when 41,005 units were listed for sale. February inventory decreased from January by 2.3 percent. This goes against historical data trends indicating that February inventory on average (2013-2017) increases 1.5 percent from January.
Demand: February residential sales increased 14.9 percent from January. This rise in sales is consistent with historical data trends indicating that February sales on average (2013-2017) increase from January by 12.7 percent. The average number of days on the market until a listing sold was 152 days, up 10.6 percent from one year ago, when listings across the state averaged 138 days on the market.
Pricing: The statewide median sales price during February was $149,469, an increase of 9 percent from one year ago. The February median sales price increased 5.6 percent from January. This direction is consistent with historical data averages (2013-2017) indicating that the February median sales price on average increases 1.5 percent from January. During February, 84 percent of Alabama markets experienced price gains from one year ago. This indicator can fluctuate from month to month because of sampling size of data and seasonal buying patterns.
Seeking balance: The metro markets in Alabama representing 70 percent of all sales shifted toward equilibrium (balance between supply and demand) with 5.1 months of housing supply during February. Outside the metro markets, Alabama’s midsize metro areas are reporting 6.7 months of housing supply, while non-metro areas are reporting 8.6 months of supply. There have been significant improvements from inventory peaks experienced during the recession.
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.
Click here to generate more graphs from the Alabama February Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.