Sales: According to the Greater Alabama MLS, February home sales in the Birmingham area increased 11.1% year-over-year (Y/Y) from 1,126 to 1,251 closed transactions, marking nine consecutive months of Y/Y gains. Sales are now up 16.3% year-to-date. Following seasonal trends, sales increased 5.1% from January. Two more resources to review: Quarterly Report and Annual Report.

For all Birmingham-area housing data, click here.

Inventory: Homes listed for sale decreased 29.1% year-over-year from 4,290 listings one year ago to 3,042 in February. Months of supply (inventory to sales ratio) decreased from 3.8 months to 2.4, reflecting a market where sellers generally have elevated bargaining power.

Pricing: The median sales price in February was $249,900, an increase of 12.1% from one year ago and an increase of 6.3% from January. 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 February averaged 28 days on the market (DOM), selling 14 days faster than in February 2020.

Forecast: February sales were 127 units, or 9.2%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 1,378 sales for the month, while actual sales were 1,251 units. ACRE forecast a total of 2,567 sales year-to-date, while there were 2,441 actual sales through February, a difference of 4.9%.

New construction: The 204 new homes sold represent 16.3% of all residential sales in the Birmingham area in February. Total sales increased 29.1% year-over-year. The median sales price in February was $297,844, an increase of 2% from January and a decrease of 13.3% from one year ago.

NAR commentary: According to the National Association of Realtors (NAR), existing home sales nationwide decreased in February, falling 6.6% from January (seasonally adjusted annual rate). However, sales did increase year-over-year, rising 9.1% from February 2020. Sales prices continue to grow at higher rates than before the pandemic, rising 15.8% year-over-year. Rising home prices are largely a result of housing inventory remaining at a record low of 1.03 million listings in February, representing a record decline of 29.5% year-over-year.

Lawrence Yun, chief economist for NAR, said, “Despite the drop in home sales for February – which I would attribute to historically low inventory – the market is still outperforming pre-pandemic levels. I still expect this year’s sales to be ahead of last year’s, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy. Many Americans have been saving money and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”

Yun also cautioned that home sales could slow in the months ahead as higher prices and rising mortgage rates decrease home affordability.

ACRE commentary: Home sales in Alabama increased 14.7% year-over-year in February, marking nine consecutive months of Y/Y gains. The strong rebound in demand seen during the second half of 2020 has extended into 2021. Year-over-year growth rates, however, have moderated somewhat since reaching a peak of 26.6% in the fourth quarter of 2020. Home sales prices continued their upward trend in February, rising 13.1% Y/Y, mainly a result of market fundamentals (increased demand and continued reduction in supply). Housing inventory in the state reached a record low of 9,950 listings in February, falling 44% Y/Y, a record decline.

Click here to view the entire monthly report.

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 Feb. 1-28. Thus, the performance represented is historical and should not be used as an indicator of future results.