Strong March numbers aside, the impact of COVID-19 will be better seen in Spring and Summer data
Editor's Note: All information in this article reflects data provided to the Alabama Center for Real Estate for the time period March 1 - 31, 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.
ACRE is posting coronavirus updates and commentary on the WIN, on our media platform exploRE and on our LinkedIn page.
Sales: March home sales in Alabama increased 6.6% year-over-year from 5,330 to 5,680 closed transactions. Following seasonal trends, sales were up 25.3% from February. Sales are now up 11.1% year-to-date, but are likely to moderate in the months ahead due to the COVID-19 pandemic. Two more resources to review: Quarterly Report and Annual Report.
For all statewide housing data, click here.
Inventory: Homes listed for sale decreased 13% from 21,017 listings one year ago to 18,282 in March. Months of supply dropped from 3.9 to 3.2, reflecting an continued seller’s market at the statewide level.
Pricing: The statewide median sales price in March was $174,943, an increase of 7.7% from one year ago and an increase of 3.3% 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 March averaged 88 days on the market (DOM), 10 days faster than one year ago.
Forecast: March sales were 23 units or 0.4% above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 5,657 sales for the month, while actual sales were 5,680 units. ACRE forecast a total of 13,829 residential sales year-to-date, while there were 14,335 actual sales through March, a difference of 3.7%.
NAR commentary: According to the National Association of Realtors, existing home sales nationwide decreased 8.5% (seasonally adjusted annual rate) from February, an expected result due to the impact of COVID-19. However, total sales (seasonally unadjusted) did increase year-over-year (3.8%) according to the National Association of Realtors (NAR), from approximately 400,000 to 415,000 closed transactions. While sales are up 7.1% year-to-date, they are likely to moderate amid the coronavirus pandemic.
The nationwide median existing-home price increased 8% in March, marking 97 consecutive months of year-over-year gains. The nationwide median sales price is now up 7.7% year-to-date, and many experts believe that prices are likely to remain stable in the months ahead, very much unlike the housing crisis of 2008 when market conditions and underlying fundamentals were quite different.
Lawrence Yun, chief economist for the National Association of Realtors, said about the seasonally adjusted annual rate decline: “Unfortunately, we knew home sales would wane in March due to the coronavirus outbreak. More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
Regarding what’s currently on the market, Yun said, “Earlier in the year, we watched inventory gradually tick upward but with the current quarantine recommendations in place, fewer sellers are listing homes, which will limit buyer choices. Significantly more listings are needed and more will come on to the market once the economy steadily reopens.”
ACRE commentary: In Alabama, March sales results were quite surprising as they increased 6.6% year-over-year. The concern, however, is that many of the transactions closing in March were under contract prior to the pandemic. Sales are now up 11.1% year-to-date (YTD), but the first quarter of 2019 was relatively weak in terms of closed sales activity, suggesting YTD growth rates should not be overemphasized. The real wildcard is April and May sales as people adjust to selling a home in the COVID era.
Home price appreciation continued as the median sales price increased 7.7% year-over-year, marking 29 consecutive months of gains. On the supply side, inventory levels (properties listed for sale) declined 13%, extending the streak of Y/Y inventory declines to 61 months. With fewer listings, it is not surprising to see homes selling at a slightly quicker pace. Properties sold during March averaged 88 days on the market, 10 days faster than one year ago.
Click here to view the entire monthly report.
The Alabama Residential Monthly Report is developed in connection with the Alabama Association of Realtors.