TUSCALOOSA – Existing home sales in Alabama softened for the second consecutive month as consumers continued to cautiously digest the impact of the evolving credit market, according to Grayson M. Glaze, J.D., executive director of the Alabama Center for Real Estate at The University of Alabama.
The result is a higher share of potential homebuyers electing to remain on the sidelines during September.
“On a positive note, despite the downward trend in demand, the average home selling price in Alabama increased by 6.12 percent when compared to September 2006, and the year-over-year median price for an existing home remained unchanged at $127,500,” Glaze said.
Existing home sales in Alabama for September totaled 4,217, which represents a decline of 11.52 percent when mirrored against September 2006. The statewide monthly home sales were the fourth highest on record for September since the Center began compiling data a decade ago, but it was the first month in 2007 that the monthly ranking dropped beyond third, Grayson said. There were 549 fewer home sales compared to the 4,766 homes sold in September 2006.
Year-to-date existing home sales in Alabama have declined at a rate of 3.29 percent through September. The statewide results remain ahead of the national sales, which, as of August, had declined by 12.8 percent, according to the National Association of Realtors. There were 44,834 homes sold in Alabama through September compared to 46,359 in 2006.
Glaze said the slower pace of existing home sales contributed to an increase in the number of homes on the market, which in Alabama was up 243 units from last month to 44,033.
More significant, however, is the comparison to September 2006 which reflects an increase in year-over-year housing inventory of 7,619 units or 20.92 percent. Glaze said at the current rate of sales, this represents a 10.4-month supply of homes, up 36.67 percent from the 7.64-month supply in September 2006, when the number of homes for sale was 36,414.
For the first time in 2007, the statewide supply is comparable to the national housing inventory as of August. Of like importance, the average days on the market has increased 6.51 percent, climbing to 125 days in September from 117 days on the market during the same period last year.
Nine of the 23 areas tracked by the Alabama Center for Real Estate reported an increase in total homes sold for September compared to last year. The increases were in Talladega County, Monroe County, Jackson County, Lake Martin, Covington, Selma, Muscle Shoals, Calhoun County and the Wiregrass.
Decreases were posted in Baldwin County, Huntsville, Mobile, Cherokee County, Tuscaloosa, Cullman, Gadsden, Birmingham, Montgomery, Marshall County, Dothan, Phenix City and Lee County.
In Alabama’s five most populous metropolitan areas, Birmingham, Montgomery, Huntsville, Mobile and Tuscaloosa, year-to-date home sales remained fairly consistent during the first nine months, reporting an average decline in total home sales versus 2006 of 3.75 percent. However, the total sales associated with the metropolitan areas in the month of September decreased 12.52 percentcompared to September 2006.
As the state’s housing market enters the final quarter of the year, the balance between supply and demand of the state’s housing inventory will take front and center stage, Glaze said.
“On the supply side, the primary question is whether new construction will be curtailed in sufficient amounts to assist in reducing the oversupply of inventory, whether realistic sellers when pricing will take into account the current levels of inventory and the unknown impact of foreclosures as adjustable-rate mortgages continue to reset in the coming months ahead,” Glaze said.
“On the demand side, the focus remains on consumer confidence which includes the consumer’s perception of the diminishing availability of financing methods. The lack of buyer confidence to enter the market has been one of the significant reasons in holding back recent home sales.”
Glaze said while the Real Estate Center anticipates continued near-term softening in home sales and pricing while excess inventory is absorbed, the year-to-date existing home sales in Alabama should still continue to remain ahead of the national trend in most of the local markets as the state economy continues to grow at a modest rate, the state unemployment remains below the national average, and personal income continues to grow.
“When taking into account the fourth quarter market conditions, the Center anticipates a year-over-year decline in existing home sales of between 5 and 7 percent,” Glaze said. “That translates into Alabama still remaining on track to experience its third best year on record since the Center began collecting data a decade ago.”
The statistics included in this report reflect the residential sales of houses, condominiums, and townhomes. Historical monthly housing statistics are available on the Web at Alabama Center for Real Estate’s homepage – www.acre.cba.ua.edu.