MONTGOMERY, Ala. — The housing market in Alabama continued to struggle in 2024, with a new report from the Alabama Association of Realtors revealing that home sales dipped 18% when compared to 2023, which itself saw historically-low home sales.
Published Wednesday, the new report details the Alabama housing market during the month of December, and reveals that there were a total of 62,539 home sales in 2024, down 13,719 from the 76,258 home sales in 2023. Home sales in December also represented a 5.7% decrease over the numbers reported for November.
David Hughes, an economist with AAR, attributed the declining home sales to high mortgage rates, with the average 30-year fixed rate mortgage having skyrocketed from as low as 2.77% in 2021 to as high as 6.95% in 2022. As of January, the average 30-year fixed mortgage rate in the United States remains as high as 7%, the highest rate since 2002.
“Mortgage rates have climbed quickly over the last five weeks, which likely doesn’t bode well for sales, and rates are very likely to remain above 6% as the Fed continues its quantitative tightening campaign,” Hughes said in a statement.
The new report also revealed that the sales volume for Alabama homes fell by $3.36 billion, from $17.9 billion in 2023 to $14.54 billion in 2024. The average days a home remained on the market increased by 10.5%, from 57 in 2023 to 63 in 2024, and foreclosures spiked by 6.1%.
Active home listings increased in 2024 by nearly 34%, climbing from 12,536 in 2023 to 16,786 in 2024, and the median sales price for Alabama homes remained largely unchanged year over year.
For January, the AAR projects that home sales will continue to decrease, predicting a dip of approximately 4.6% when compared to January, as will the home sales volume, by 4.3%. Foreclosures are projected to decrease in January by 1.4%, and the median sale price is projected to remain largely unchanged.
While not the only factor in mortgage rates, the federal interest rate correlates significantly with mortgage rates, and currently sits around 4.33%. As low as 0.8% in 2022, the Federal Reserve hiked interest rates in 2022 through 2023 to combat rising inflation, though had reduced rates several times throughout 2024.
Hopes for further cuts into 2025, however, have been tempered, with the Federal Reserve expected to maintain current interest rates at its next meeting in late January. While a potential rate cut is anticipated in March, a majority of economists in a Reauters survey predict two or fewer rate cuts this year.
“If history is any guide, then the first quarter of the year is usually slow for sales, but less competition among buyers, slightly lower prices, and normalizing mortgage rates provide many great reasons for buyers to make a move,” Hughes said.