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Sales: According to the Montgomery Area Association of Realtors’ Multiple Listing Service, Montgomery-area residential sales totaled 417 units during March, an increase of 13.6 percent from March 2017’s 367 residential sales. Existing single-family homes accounted for 81 percent of residential sales, while newly constructed homes were 18 percent. Additional resources to review are the Quarterly Report and the Annual Report.

Forecast: Closed transactions during March were 14 units or 3.5 percent above the Alabama Center for Real Estate’s monthly forecast. ACRE projected 403 sales for the month, while actual sales were 417 homes. ACRE forecasts a total of 4,637 residential sales in the Montgomery area during 2018. There were 4,400 actual sales in the area during 2017. 

Supply: The Montgomery-area housing inventory in March was 2,143 units, a decrease of 4 percent from March 2017 and 19.5 percent below the 10-year March inventory peak reached in 2008 (3,416 total listings). March inventory in the Montgomery area increased 9 percent from the prior month. This direction is consistent with historical data indicating March inventory on average (2013-17) increases 3.7 percent from January.

Demand: March residential sales increased 52.2 percent from the prior month. Listings that sold in the Montgomery area during March averaged 109 days on the market, an increase of 2.8 percent from the same month last year. The five-year days-on-market average for March is 115 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 5.1 months of housing supply during March, down from 6.1 months of supply one year ago and down from 7.2 months of supply in February.

Pricing: The Montgomery-area median sales price in March was $160,000, up 14.3 percent from March 2017’s median sales price of $140,000. The median sales price increased 16.2 percent from the prior month. This trend is consistent with historical data (2013-17) indicating that the March median sales price increases from February by 5.9 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: 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.

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