April Housing Statistics Suggest Market Beginning to Slow

TUSCALOOSA, Ala. – For the first time in 2000, the number of existing homes sold declined, ending a three-month period of rising home sales.

“Although its too early to call this a trend, the housing statistics in April do suggest the existing housing market is beginning to slow down,” said Dr. Leonard Zumpano, director of the Alabama Real Estate Research and Education Center in the Culverhouse College of Commerce and Business Administration at The University of Alabama.

Zumpano said the total number of homes sold in April, as reported by local realtor associations, was 2,797, down from 3,115 home sales in March. “This represents a 10 percent decline in the number of homes sold,” he said.

Year-to-date totals also declined from the same time last year, the first such decline reported this year. Average selling price rebounded in April, increasing to $115,707 from $111,606 in March, while selling time remained unchanged from the prior month, at 137 days. This was also the same average selling time reported during April 1999.

Overall, the April housing statistics paint a mixed picture as far as the strength of the existing housing market is concerned.

Within the state, the number of homes sold declined in 14 of the 20 reporting areas. Existing home sales rose in five locations and remained unchanged in Jackson County. In some communities, the April decline in home sales was substantial, declining by 20.6 percent in Tuscaloosa, 12 percent in Montgomery, and 33.6 percent in Calhoun County.

Statewide, existing home prices rose, but eight locations reported a decline in home prices. In some of these cases, the fall in existing home prices was sizeable. Prices declined by almost 17 percent in the Lake Martin area, by 25 percent in Cullman, 14.6 percent in Monroe County, and 12 percent in Tuscaloosa.

“Not too much should be made of month-to-month changes in home prices unless a given location reports a continued increase or decrease in home prices,” Zumpano said. “So far, no such trend is evident. The same can be said for monthly changes in selling time that are reported for individual areas.”

April was the first month this year that, on a statewide basis, existing home sales declined. In some of the reporting locations, the decline in home sales was quite sizeable. Zumpano said while one month does not make a trend, it is important to note this decline in home sales occurred before the Federal Reserve’s hefty half percent increase in interest rates.

This is the sixth consecutive time the Fed has raised interest rates and, eventually, continued substantial credit tightening will have a depressing effect on the housing market, he said. The increased volatility exhibited by the equity markets, and what could be the beginning of a bear market, may also negatively impact the housing market during upcoming months as consumers feel less wealthy and reduce spending on big ticket items, such as homes and automobiles, according to Zumpano.

The University of Alabama Culverhouse College of Commerce and Business Administration, founded in 1919, is home to the Alabama Real Estate Research and Education Center. The Center works with the Alabama Association of REALTORS, the Alabama Real Estate Commission and the research division of the National Association of REALTORS to compile a state housing affordability index each quarter.

Contact

Bill Gerdes, UA Business Writer, 205/348-8318

Source

Dr. Leonard Zumpano, Director, Alabama Real Estate Research and Education Center, 205/348-8988