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Alabama home sales continue decline, though improving mortgage rates signal market rebound

MONTGOMERY, Ala. – The number of homes sold in Alabama continues to decline, according to the latest monthly report from the Alabama Association of Realtors, though new data on improving mortgage rates has shown promise for a potential market rebound, the AAR reported.

A total of 4,984 homes were sold in Alabama in December, nearly 42% less than what was reported in December of 2022, and 6% less than what was reported in November. In total, home sales were down 30.5% in 2023 when compared to the previous year.

The average number of days a home was on the market increased in 2023 by 29.5% when compared to 2022, jumping from 44 days to 57, as did the average number of active listings, which increased in 2023 by 28.3%.

At the same time, foreclosures have continued to rise, with 487 foreclosures reported in December, an 11% increase over December of 2022, and a 7% increase in 2023 over the previous year.

The only housing metric that reversed course when compared to the previous 12 months was median price, which at $223,982, was 7.5% higher when compared to December of 2022. Unlike other housing market metrics, median home price had been in steady decline for the past year, only reversing course in November when it increased by less than 1%.

Data from the Alabama Association of Realtors’ December report.

The national housing market has stagnated as well, with home sales now hitting their lowest level since 1995, a decline that has coincided with the U.S. Federal Reserve hiking interest rates in an effort to combat rising inflation. With U.S. officials signaling a reduction in interest rates this year, however, some housing market metrics have seen recent improvement.

For the ninth consecutive week, average 30-year fixed mortgage rates in Alabama have decreased, from a high of nearly 8% in October, to 6.6% as of Jan. 18, the lowest rates since May of 2023. 

National mortgage rates saw similar levels of improvement, something Heather Mahmood-Corley, a real estate agent with the real estate company Redfin, said could help reverse declining home sales in the near future.

“More buyers are out there touring this week; they feel optimistic now that rates have come down a bit,” Mahmood-Corley said. “Interest rates are lower and there are more listings, but there’s not much competition yet. With activity picking up, I think prices will rise and bidding wars will become more common.”

Included in the AAR’s December report were also forecasts for January. For home sales, the AAR projects a continued decrease from December to January of around 5.3%, but an increase in median sale price of 2.1% during that same period.

Based on existing trends, the AAR projects that the average days on market for a home will also increase from December to January by around 7.5%, whereas foreclosures are projected to decrease by 5.3%.

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