Sales: According to the Cullman MLS, there were 80 residential sales in Cullman County during March, a 19.4 percent increase from one year ago. Current sales volume is 29 percent above the five-year March average of 62 closed transactions. Two more resources to review: Quarterly Report and Annual Report.
Forecast: March sales were 10 units or 11 percent below the Alabama Center for Real Estate’s monthly forecast. ACRE forecast 220 residential sales year-to-date in the area, while there were 186 actual sales through March.
Demand: March residential sales increased by 35.6 percent from the prior month. Historical data indicate that March residential sales on average (’13-’17) increase from February by 40.6 percent. Homes selling in Cullman County in March averaged 113 days on the market, an increase of 5.6 percent from one year ago.
Supply: A total of 509 homes were listed for sale in the area during March, representing a decrease of 5.9 percent from one year ago. Total listings in the area decreased 4.9 percent from the previous month. This is inconsistent with historical data trends from 2013-17 indicating that inventory on average increases from February by 14.1 percent.
Seeking balance: The inventory for sale divided by the current sales volume equals the number of months of supply. The market is considered to be in balance at approximately 6 months of supply. The inventory-to-sales ratio in March was 6.4 months of supply, down from 8.1 months one year ago.
Pricing: The median sales price in March was $141,400, an increase of 3.2 percent from one year ago. The median sales price was 2.4 percent below the prior month. Historical data trends from 2013-2017 indicate that the March median sales price on average decreases by 5.9 percent from February. Pricing can fluctuate from month to month as the sample size of data (closed transactions) is subject to seasonal buying patterns. ACRE recommends consulting a local real estate professional.
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.