Alabama’s housing inventory reaches record low in February
Sales: According to the Alabama Association of REALTORS, February home sales in the state increased 14.7% year-over-year (Y/Y) from 4,533 to 5,197 closed transactions, marking nine consecutive months of Y/Y gains. Following seasonal trends, sales increased 7.6% from January. Sales are now up 15.8% 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 44% from 17,770 listings one year ago to 9,950 in February, a record low. The state’s housing inventory has declined year-over-year for 72 consecutive months. Months of supply (inventory to sales ratio) dropped from 3.9 to 1.9, reflecting a market where sellers generally have elevated bargaining power.
Pricing: The statewide median sales price in February was $191,449, an increase of 13.1% from one year ago and an increase of 2.4% 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 67 days on the market (DOM), 26 days faster than one year ago.
Forecast: February sales were 157 units, or 2.9%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 5,354 sales for the month, while actual sales were 5,197 units. ACRE forecast a total of 10,316 sales in the state year-to-date, while there were 10,026 actual sales through February, a difference of 2.8%.
New Construction: The 797 new homes sold represent 15.3% of all residential sales in the area in February. Total sales increased 20% year-over-year, extending the state’s streak of Y/Y gains in new home sales to 20 consecutive months. The median sales price in February was $256,893, an increase of 3.8% from one year ago and a decrease of 4.4% from January. New homes sold in an average of 46 days, 43 days faster than February 2020.
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 (Y/Y) 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 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 February 1 - 28, 2021. Thus, the performance represented is historical and should not be used as an indicator of future results.