Alabama's real estate market continues growth in December
Sales: According to the Alabama Association of REALTORS, December home sales in the state increased 24.2% year-over-year from 5,116 to 6,355 closed transactions. Following seasonal trends, sales increased 11.2% from November. Statewide home sales are now up 12.9% year-to-date. Two more resources to review: Quarterly Report and Annual Report.
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Inventory: Homes listed for sale decreased 35.3% from 18,562 listings one year ago to 12,006 in December, marking 70 consecutive months of year-over-year inventory declines. Months of supply (inventory to sales ratio) dropped from 3.6 to 1.9, reflecting a market where sellers generally have elevated bargaining power.
Pricing: The statewide median sales price in December was $191,391, an increase of 15% from one year ago and a decrease of 1.7% from November. 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 December averaged 69 days on the market (DOM), 15 days faster than one year ago.
Forecast: December sales were 1,491 units or 30.8% above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 4,858 sales for the month, while actual sales were 6,355 units. ACRE forecast a total of 65,468 residential sales year-to-date, while there were 66,186 actual sales through December, a difference of 10.8%.
New Construction: New home sales hit an all time high of 1,134 closed transactions, passing the prior record set in June 2020 (1,070 sales). Total sales increased 31.9% year-over-year, extending the state’s streak of Y/Y gains in new home sales to 18 consecutive months. The median sales price in December was $273,856, an increase of 12.3% from one year ago and an increase of 2.4% from November. New homes sold in an average of 58 days, 15 days faster than December 2019.
NAR commentary: According to the National Association of Realtors (NAR), existing home sales nationwide increased 0.7% from November (seasonally adjusted annual rate), reaching the highest annual level since 2006. Sales increased significantly from one year ago, rising 22.2%. Sales prices continued to grow at higher rates than before the pandemic, rising almost 13% year-over-year.
Lawrence Yun, chief economist for NAR said, “Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic. What's even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market. Although mortgage rates are projected to increase, they will continue to hover near record lows at around 3%. Moreover, expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution already underway.”
ACRE commentary: Home sales in Alabama increased for the seventh consecutive month in December, rising 24.2% year-over-year. The strong rebound in sales activity during the summer months has extended into early winter, with all metro areas in the state recording year-over-year gains in home sales during 2020. Buyers are incentivized by low mortgage rates, increasing their buying power during a time of rising sales prices, which increased 15% Y/Y in December. Sales prices continue to grow at a faster rate than before the pandemic, which could motivate more potential sellers to list their homes going forward. Tight inventory has played a large role in driving sales prices upwards, with total listings down 35.3% in December.
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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 December 1 - 31, 2020. Thus, the performance represented is historical and should not be used as an indicator of future results, particularly considering the impact of COVID-19 on the housing market.