Alabama residential sales totaled 3,957 units in September, an increase in sales growth of 11.1 percent from the same period a year earlier and 201 units above of our monthly forecast. September joins June and July as the only months in 2014 where sales have eclipsed last year. Nationally, sales were off 1.7 percent in September from the prior year. See more details of how Alabama compares to the broader US market here.
The YTD Alabama sales forecast through September projected 35,170 closed transactions while the actual sales were 34,169 units, a 2.8 percent cumulative variance. YTD sales through September have been sluggish in most markets across the State but remain 2.4 percent above the 2013. Sales were up 3.3 percent in the third quarter compared to 2013.
Across Alabama, 76 percent of local markets reported positive sales growth compared to last September. In comparison, this figure was 64 in August and 48 percent in July. This figure also remains at 54 percent when taking into account total YTD sales compared to 2013.
Pricing: While the return of more consistent year-over-year sales gains is encouraging news, the lead story in 2014 relates to pricing. The Center shared in earlier reports that pricing represents the primary indicator that still had the greatest upside in the future. At least through September, this has come to fruition as the YTD median sales price is up in 19 of 25 or 76 percent of local markets. While this is good news for the market, as prices increase, sales (the typical lead story) attributable to investors bargain hunting will diminish the ability of this “buyer profile” to push the sales needle in the future. Distressed sales continue to significantly diminish as a percentage of total sales across the US, a trend most market watchers content will continue in the future.
The median sales price improved by approximately 4.5 percent over last September and 6.1 percent when comparing the year-to-date (Jan-September) average for a broader perspective. Still, Alabama remains below the nation’s recent pace of appreciation but the Center prefers gradual increases in pricing over spikes seen in many parts of the country (typically in markets hardest hit by the recession). Keep in mind that pricing can fluctuate from month-to-month due to sampling size of data and seasonal buying patterns. The median price decreased 8.7 percent from the prior month. This direction is consistent with historical data (09-13) that reflects that the September median sales price traditionally decrease from the month of August by 2.6 percent.
Supply: The statewide housing inventory in September was 32,992 units, a decrease of 2.5 percent from September 2013 and 22.1 percent below the month of September peak in 2007 (42,329 units). There was 8.3 months of housing supply (7.5 months considered equilibrium during month of September) in September 2014 versus 9.5 months of supply in September 2013, a 12.2 percent favorable decrease. September inventory also decreased by 1.7 percent from the prior month. This direction is consistent with historical data that indicates September inventory on average (09-13) traditionally decreases from the month of August by 5.6 percent.
Demand: As anticipated, September statewide residential sales declined 4.4 percent from the prior month. This direction is consistent with seasonal trends & recent historical data that indicates September sales, on average (09-13), decrease from the month of August by 9.9 percent.
The fact that there are fewer distressed properties (attracting bargain hunting investors – typically cash buyers) changing hands when compared to last year has also narrowed the favorable percentage change associated with sales growth.
Seeking Balance: Ten or 42 percent of local markets are considered near or in balance where buyer and seller enjoy equal bargaining power. More markets are inching closer so this is encouraging news.
In contrast to reports of lack of inventory at the national level, Alabama still has above the needed levels of supply in most local markets (13 of 25 markets or 52 percent still have 10+ months of supply) but the supply of “quality” inventory is limiting sales according to local professionals with boots on the ground.
Industry Perspective: “The September National Housing Survey shows a slight recovery in consumer housing sentiment after a two-month setback, bringing us back to the modestly positive trend we’ve seen over the last year,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “It might be too late to save this year’s home sales from posting the first decline in five years. However, the return to an upward trend in housing sentiment, combined with this month’s positive news on the jobs front, suggests that a broad-based, albeit measured, housing recovery is on track to resume in 2015. The results of the past few months show that consumer optimism remains cautious and somewhat volatile, and we’ll likely continue to see bumps on the housing recovery path reflected in our survey results.” For full report, go HERE.