AL, Jun 26, 2008 – (RealEstateRama) — May 2008 home sales in Alabama increased 14.20 percent from the prior month. As anticipated within the industry, year—over—year sales remain below seasonal norms with total statewide home sales of 4,569 units during May, a decline of 22.81 percent representing 1,350 fewer homes sold compared to May of last year. This figure should be viewed in context that the preceding May reflects the best statewide month of May on record at 5,919 units. That said, the 5—year sales average (03-07) for the month of May is 5,415 units, or 18.03 percent greater than the current results.
The 2008 Year to Date (YTD) home sales decreased by 21.03 percent when compared to the same period in 2007 (19,067 vs. 24,146). None of the five major metro area(s) experienced monthly or YTD growth in year—over—year sales percentage. Mid—market Florence—Muscle Shoals continues to shine and handily outperform peer and metro markets with single digit YTD sales decline of 7.24 percent. The only rural areas with positive year—over—year sales growth during the month were Monroe County and Jackson County.
The total statewide homes listed for sale of 44,645 units during May 2008 increased by only 1.01 percent from April 2008, beating the 5—year historic average increase of inventory between months of 2.76%. Housing supply increased 4.48 percent when compared to May of last year; however, the increase pales in comparison to the May 07 versus May 06 year—over—year increase of 30.35 percent. Alabama homebuilders continue to yield to current market conditions as reflected by the 35 percent reduction of YTD building permits as tracked by the Alabama Center for Real Estate.
May represents a lateral and virtually unchanged movement in the Alabama housing supply that has experienced downward movement of inventory levels in four of the last six months. The month—over—month housing inventory follows a historical pattern that shows an increase in inventory from April to May in every year dating back to 2000, with the exception of 2004. The 5—year inventory average (03-07) for the month of May is 30,707 units for sale or 39.15 percent lower than current inventory level.
For the third month in a row, Birmingham was the only major metro area to experience a year—over—year reduction in inventory (5.5 percent decrease), while Baldwin County (11.64 percent decrease — 3rd consecutive month) and Gadsden (1.9 percent decrease) represented supply reduction in midsize markets. Jackson County (1.09 percent decrease) and Walker County (3.73 percent decrease) were the only rural areas with year—over—year inventory reduction.
The median selling price in May 2008 increased by 1.27 percent as compared to May 2007 ($130,724 vs. $125,718). The YTD median selling price through May 2008 increased by .51 percent as compared to YTD May 2007 ($126,588 vs. $125,950). The 5—year average median selling price (03-07) for the month of May is $119,879 or 7.68 percent lower when compared to current results. Fifteen local markets, or 65 percent (last month was 48%), reported year—over—year median selling price gains with Birmingham topping major metros with 4.95 percent price growth, Muscle Shoals—Florence leading the midsize markets with 8.80 percent price growth and Wiregrass outpacing rural areas with an increase of 17.54 percent.
The average home selling price in May 2008 increased by 4.15 percent when compared to May 2007 ($165,428 vs. $158,842). The YTD average home selling price through May 2008 increased by .79 percent when compared to YTD May 2007 ($154,325 vs. $153,118) representing return to positive territory for the first time this year. The 5—year average selling price (03-07) for the month of May was $143,941 or 14.93 percent lower when compared to the current results.
Fourteen local markets, or 61 percent (% unchanged from prior month) of reporting areas, reported year—over—year average selling price gains with Tuscaloosa leading major metros with 7.71 percent, Dothan leading the midsize markets with 4.44 percent price growth and Jackson County outpacing rural areas with an increase of 54.27 percent (low total number of sales distort percent change). It should be noted that median price statistics above is considered the most appropriate method when analyzing price parameters.
The average days on market (DOM) during May 2008 were 138, which represents an increase of 2.02 percent from the 135 days from listing to sale in April 2008. The YTD DOM through May 2008 increased by 14.19 percent when compared to YTD May 2007 (138 days vs. 121 days). The 5—year average DOM (03-07) for the month of May is 136 days which is consistent with the current results. Nine local markets, or 39 percent (down from 65 percent last month), reported year—over—year decreases in DOM with Birmingham leading the major metro markets with a 6.54 percent decrease in DOM and Cherokee County leading rural areas with a decrease in DOM of 23.53 percent.
The inventory of homes for sale at the current sales pace is represented by the inventory—to—sales (I/S) ratio. Since its peak in January 2008 of 13.9 months, the I/S ratio has declined in three of the last four months. The May 2008 I/S ratio was 9.8 months, indicating that at the current sales pace, the existing supply of homes would be depleted in 9.8 months, significantly higher than the previous five—year (03-07) average of 5.7 months during May but 10.91 lower than previous month and trending in the desired direction, which is positive news.
By Grayson M. Glaze, J.D., Executive Director, Alabama Center for Real Estate