Statewide Residential Sales Remain Strong in February 2020 While Uncertainty Lies Ahead
Editor's Note: All information in this article reflects data provided to the Alabama Center for Real Estate for the time period February 1 - 29, 2020. Thus, the performance represented is historical and should not be used as an indicator of future results, particularly considering the upcoming impact of COVID-19 on the housing market.
Sales: February home sales in Alabama increased 7.2% year-over-year from 4,230 to 4,533 closed transactions. Following seasonal trends, sales were up 10% from the prior month. Sales are now up 14.2% year-to-date, but are likely to moderate amid growing uncertainty. Two more resources to review: Quarterly Report and Annual Report.
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Inventory: Homes listed for sale decreased 13.9% from 20,637 listings one year ago to 17,770 in February. Months of supply dropped from 4.9 to 3.9, reflecting an continued seller’s market at the statewide level.
Pricing: The statewide median sales price in February was $169,340, an increase of 7.8% from one year ago and an increase of 1.4% from the prior month. This indicator can fluctuate from month to month because of the sampling size of data and seasonal buying patterns. Homes sold in February averaged 92 days on the market (DOM). Homes sold four days faster than one year ago.
Forecast: February sales were 161 units or 3.7% above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 4,372 sales for the month, while actual sales were 4,533 units. ACRE forecast a total of 8,172 residential sales year-to-date, while there were 8,655 actual sales through February, a difference of 5.9%.
ACRE’s statewide perspective: While February sales results were very encouraging, up 7.2% year-over-year, they do not reflect the current turmoil in the stock market or the sizable hit to the global economy expected from the coronavirus and subsequent social quarantines. The statewide market is up 14.2% year-to-date, but sales are likely to moderate in the months ahead. Home price appreciation continued to climb as the median sales price increased 7.8% year-over-year, marking 28 consecutive months of gains. While properties listed for sale nationwide decreased 9.8% year-over-year, Alabama’s residential listings continued to tighten, decreasing 13.9%. Low inventory levels were a significant factor contributing to rising sales prices throughout 2019 and continued into February. With fewer listings, it is not surprising to see homes selling at a slightly quicker pace. Homes selling in Alabama during February spent an average of 93 days on the market, a decrease of 4 days from one year ago.
NAR’s national perspective: Existing home sales increased substantially in February, rising 7.7% year-over-year from approximately 311,000 closed transactions one year ago to 335,000 currently. Sales are up 9.4% year-to-date. The nationwide median existing-home price increased 8% in February, marking 96 consecutive months of year-over-year gains. Lawrence Yun, chief economist for the National Association of Realtors, said, “ February’s sales of over 5 million homes were the strongest since February 2007. I would attribute that to the incredibly low mortgage rates and the steady release of a sizable pent-up housing demand that was built over recent years. These figures show that housing was on a positive trajectory, but the coronavirus has undoubtedly slowed buyer traffic and it is difficult to predict what short-term effects the pandemic will have on future sales.”