Sales: According to the Greater Alabama MLS, May home sales in the Birmingham area decreased 21.5% year-over-year from 1,652 to 1,297 closed transactions. Going against seasonal trends, sales decreased 0.8% from April. Sales are down 5.4% year-to-date and are likely to decline in the months ahead due to the economic impact of COVID-19. Two more resources to review: Quarterly Report and Annual Report.
For all Birmingham-area housing data, click here.
Inventory: Homes listed for sale decreased 14.6% year-over-year from 5,405 listings one year ago to 4,614 in May. Months of supply (inventory to sales ratio) increased from 3.3 months to 3.6, reflecting a market where sellers generally have elevated bargaining power.
Pricing: The median sales price in May was $244,000, an increase of 3.8% from one year ago and a decrease of 0.4% from April. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.
Homes sold in May averaged 30 days on the market (DOM), selling seven days faster than those sold in May 2019.
Forecast: May sales were 352 units, or 21.4%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 1,649 sales for the month, while actual sales were 1,297 units. ACRE forecast a total of 6,590 residential sales year-to-date, while there were 6,079 actual sales through May, a difference of 7.8%.
Click here to view the entire monthly report.
NAR commentary: According to the National Association of Realtors (NAR), existing home sales nationwide fell 9.7% during May (seasonally adjusted annual rate). This marks a three-month decline in sales activity due to the pandemic. Sales prices, however, remained somewhat stable as the nationwide median sales price increased 2.3% from one year ago, extending the streak of year-over-year price gains to 99 consecutive months.
When addressing slowing home sales, Lawrence Yun, NAR chief economist, said, “Sales completed in May reflect contract signings in April – during the strictest times of the pandemic lockdown, and hence the cyclical low point. Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”
Yun added that “New home construction needs to robustly ramp up in order to meet rising housing demand; otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”
ACRE commentary: Closed sales data from May shows that total residential sales declined 15% year-over-year. Sales prices, however, increased 7.1% year-over-year in May. Inventory (properties listed for sale) was tight before the pandemic, and inventory continues to be constrained as listings declined 22% from one year ago. In the months ahead, sales activity is likely to slow when compared to the prior year due to the growing economic impact of the pandemic. While sales prices were somewhat stable through May, they could decline slightly later in the year if demand continues to soften. Pricing dynamics driven by the law of supply and demand are always at work moving toward or away from market equilibrium (6 months of supply), where buyer and seller have equal bargaining power. In May, months of supply was at 3.1 months.
The Birmingham Area Residential Monthly Report is developed in connection with the Birmingham Association of Realtors.
Editor’s Note: All information in this article reflects data provided to the Alabama Center for Real Estate for the time period May 1-31. Thus, the performance represented is historical and should not be used as an indicator of future results, particularly considering the impact of COVID-19 on the housing market.