Alabama Housing Market Rebounds in February, According to Stats from UA’s Real Estate Research Center

TUSCALOOSA, Ala. – The Alabama existing home market rebounded some in February as the number of existing homes sold increased to 3,856, a 15.2 percent increase over January sales, according to figures released by the Alabama Real Estate Research and Education Center at The University of Alabama.

“The February rebound appears to be a typical occurrence in Alabama as it has occurred every year since 2000,” said Dr. Leonard Zumpano, director of the center. Existing home sales are also up 8.1percent compared to February of last year, according to statistics, and on a year-to-date basis, total homes sales in Alabama are up 7 percent from the same time last year.

During February, average days on the market fell 6.2 percent from 146 days to a tighter 137 days. During the same period, the number of homes on the market increased from 23,552 in January to 24,122 in February. At the current sales rate, this represents a 6.3 month supply of homes, down from the seven month supply in January.

According to the National Association of Home Builders, 3,760 single-family building permits were issued in Alabama during February. This represents a 4 percent year-to-date increase from 2004. “It should be noted that not all locations in Alabama require building permits, so it is the trend rather than the absolute number that is important here,” Zumpano said.

Alabama’s average selling price decreased from its all-time record of $145,742, set in January, to $137,971 in February. Despite last month’s decline, the statewide average existing home price is 19.9 percent higher than in February 2004, a very strong showing, according to Zumpano.

Within Alabama, the number of existing homes sold increased in 19 of the 21 areas tracked by the Real Estate Research Center. Home sales fell in Jackson County and the Muscle Shoals area.

While no area in Alabama broke sales records in February, some of the month to month increases were dramatic. Existing home sales increased by 143 percent in Covington County, 56 percent in Gadsden, 31 percent in Dothan, and 23 percent in Tuscaloosa.

For the entire Southern region, however, the number of existing homes sold decreased by 90,000 units to 2,560,000 during February. This represents a 3.4 percent decrease compared to January, but an 8 percent increase over February 2004. The average selling price in the South decreased by 3.7 percent, from $219,000 in January to $211,000 in February.

Nationally, the number of existing homes sold declined from 6,820,000 in January to 6,790,000 in February. Compared to the same time last year the number of existing homes sold during February are up 6.1 percent in February.

During February, 219,200 building permits were issued in the U.S. which is an 8 percent year-to-date increase over 2004. New home sales were also up during February, increasing by 105,000 units from the previous month.

The national average selling price edged up 1 percent in February, to $243,000. It is up a healthy 8.8 percent compared to last February, Zumpano said.

“The real question is, where is the housing market headed?” Zumpano said. “On balance the data discussed here still points to an expanding market, for both new and existing homes. The strong market largely reflects the expanding economy and the very low mortgage interest rates that have persisted throughout the recovery.

“In fact, during February Freddie Mac reported that the national average long-term fixed mortgage rate fell .08 percent to 5.63 percent, despite Fed action raising short-term rates. In March, however, we saw an increase in long-term mortgage rates, up over 100 basis points from February lows.

“The growing federal deficit, the drop in the value of the dollar, and rising oil prices are all adding inflationary pressure to the U.S. economy. With both borrowing costs now rising, along with housing prices, most analysts are expecting a slowdown in the housing market in the months to come, with some local markets, where price appreciation has been greatest, at somewhat greater risk than in locations where price increases have been more moderate.”

The Alabama Real Estate Research and Education Center is part of The University of Alabama’s Culverhouse College of Commerce and Business Administration. The UA business school, founded in 1919, has been recognized repeatedly during the 1990s for offering a high-quality, cost-effective education.

(Alan J. Lloyd, research assistant, contributed to this report.)