Sales: According to the Valley Multiple Listing Service, there were 85 residential sales in the Gadsden area during March, an increase of 2.4 percent from one year ago. Existing single-family homes accounted for 95 percent of all residential sales, with new construction sales accounting for the remaining 5 percent. Two more resources to review: Quarterly Report and Annual Report.
Click here to view all of the Alabama Center for Real Estate’s Gadsden residential data.
Forecast: March sales were three units or 3.7 percent above the Alabama Center for Real Estate’s monthly forecast. ACRE forecasts a total of 927 residential sales in the Gadsden area during 2018. There were 896 actual sales in 2017.
Supply: A total of 632 homes were listed for sale in the area during March, an increase of 12.9 percent from one year ago. Current inventory in the area is 9.1 percent below the five-year March average of 695 listings.
Demand: March residential sales increased 23.2 percent from February. This trend is consistent with historical data indicating that March residential sales on average (2013-2017) increase from February by 19.7 percent. Residential sales in the Gadsden area averaged 141 days on the market in March, down 12.4 percent from 161 days on the market one year ago.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of supply. The market is considered to be in balance at approximately 6 months of supply. There were 7.4 months of supply in the Gadsden area during March, down from 10.2 months one year ago. In other words, at the March sales pace, it would take 7.4 months to absorb the current inventory for sale.
Pricing: The Gadsden-area median sales price in February was $117,000, an increase of 36 percent from one year ago. The median sales price decreased 2.7 percent from the prior month. Historical data trends from 2013 through 2017 indicate that the median price in the area increases by an average of 13.4 percent from February to March. 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.
Click here to generate more graphs from the Gadsden March Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.