Alabama’s housing inventory reaches another record low in May
Sales: According to the Alabama Association of REALTORS, May home sales in the state increased 27.6% year-over-year (Y/Y) from 5,434 to 6,936 closed transactions, marking 12 consecutive months of Y/Y gains. Going against seasonal trends, sales decreased 1.9% from April. Sales are now up 23.8% year-to-date. Two more resources to review: Quarterly Report and Annual Report.
For all statewide housing data, click here.
Inventory: Homes listed for sale decreased 45.1% from 17,042 listings one year ago to 9,363 in May, a record low. The state’s housing inventory has declined year-over-year for 75 consecutive months. Months of supply (inventory to sales ratio) dropped from 3.1 to 1.3, also a record low and reflecting a market where sellers generally have elevated bargaining power.
Pricing: The statewide median sales price in May was $206,562, a record high and an increase of 11.6% from one year ago and an increase of 2.4% 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 52 days on the market (DOM), a record low and 34 days faster than one year ago.
Forecast: May sales were 591 units, or 7.9%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 7,527 sales for the month while actual sales were 6,936 units. ACRE forecast a total of 31,354 sales in the state year-to-date, while there were 31,054 actual sales through May, a difference of 1%.
New Construction: The 861 new homes sold represent 12.4% of all residential sales in the area in May. Total sales increased 1.1% year-over-year, extending the state’s streak of Y/Y gains in new home sales to 23 consecutive months. The median sales price in May was $288,683, a record high and an increase of 14.5% from one year ago and an increase of 1.6% from April. New homes sold in an average of 47 days, 15 days faster than May 2020.
NAR commentary: According to the National Association of Realtors (NAR), existing home sales nationwide decreased for the fourth consecutive month in April, falling 0.9% from April (seasonally adjusted annual rate). However, sales did increase 44.6% year-over-year. The median sales price for existing homes hit another historic high ($350,300), rising 23.6% year-over-year, also a record gain. Rising home prices are largely a result of extremely low housing inventory amid significantly elevated demand. The 1.23 million units listed for sale represent a decline of 20.6% year-over-year, resulting in 2.5 months of supply (4.8 in May 2020).
Lawrence Yun, chief economist for NAR said, "Home sales fell moderately in May and are now approaching pre-pandemic activity. Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market.”
Yun added that the market outlook is encouraging: “Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes.”
ACRE commentary: Home sales in Alabama increased year-over-year (Y/Y) for the 12th consecutive month in May, rising 27.6%.The growth rate in home sales was higher than usual due to the pandemic-related lockdowns of May 2020. Home sales prices continue to rise but at slower rates, even amid record-low inventory. The statewide median sales price gained 11.6% Y/Y in May while it averaged 13% from January-April 2021 and 13.8% from June-December 2020. Housing inventory in the state continued to tighten, reaching another record low of 9,363 listings across the state in May, a decrease of 2.3% from April and down 45.1% from 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.
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, 2021. Thus, the performance represented is historical and should not be used as an indicator of future results.