TUSCALOOSA, Ala. –The sale of existing homes in Alabama remained steady in August with 5,641 units sold, compared with 5,664 units in July, according to the Real Estate Research and Education Center at The University of Alabama.
This represents a mere 0.41 percent decrease in sales since last month, according to Dr. Leonard Zumpano, director of the UA center. The average sales price set a record for the state at $157,613, increasing 5.44 percent since last month. August was the third consecutive month in which Alabama’s average sales price set a record. The average number of days on the market remained unchanged from last month at 127 days, and the total number of homes for sale rose by only 1.7 percent to 26,712 units. This represents a 4.7 month supply of existing homes at the current sales pace.
Statewide, year-to-date home sales rose 6.08 percent from August of 2004 to 40,307 units. The year-to-date average sales price is up by a 14.39 percent again this month at $145,874, compared to $127,524 in August, 2004. The year-to-date average number of days on the market for this year is down nine days at 133, compared to 142 days as of August of 2004. All these statistics point to a strong and expanding housing market in Alabama, Zumpano said.
In the 21 areas tracked by AREREC, there was virtually an even split in gains and losses reported in the number of homes sold in August. The year-to-date figures, which are typically better gauges for market trends than volatile month-to-month figures, indicate an increase in home sales in 18 of the 21 areas.
The average sales price figures for the month were also almost evenly split with 10 areas reporting a decrease in average sales price and 11 areas reporting an increase. Once again, the year-to-date figures indicate a different trend with all but two of the areas reporting an increase in average sales price.
The average 30-year fixed mortgage rate remained relatively unchanged in August, still approximately 5.8 percent. Long-term interest rates are expected to rise soon due to the expanding economy. The Alabama unemployment rate fell again in August to 3.8 percent, still below the national rate of 4.9 percent.
Existing home sales at the national level increased by 2 percent in August to 7.29 million units on a seasonally adjusted, annualized rate according to the National Association of Realtors®. This figure represents the second highest figure on record, falling behind the highest record set in June at 7.35 million units sold. The national median sales price for existing homes is up 15.8 percent from August of 2004 at $220,000.
New home sales declined by 10 percent in August to 1.24 million units (seasonally adjusted, annualized), following a record-breaking increase in July. The national median sales price for new homes was also $220,000, up only 1 percent from last year’s figure. At the current sales pace, the national supply of new homes for sale is 4.7 months, although 22 percent of units for sale are not yet started.
Although housing starts remained over the two million mark for the fifth straight month, August starts fell by 1.3 percent to 2.01 million units (seasonally adjusted, annualized).
Employment continued to advance with 169,000 payroll jobs added in August. The national unemployment rate fell slightly to 4.9 percent. As in July, the Consumer Price Index rose by 0.5 percent. Core prices, which exclude food and energy, rose by only 0.1 percent. An incredible 5 percent increase in fuel prices in August continued to drive the CPI upward.
“It is anybody’s guess as to how the housing market will perform for the rest of the year,” Zumpano said. “High gasoline prices, a huge and expanding deficit, and inflationary pressures from the expanding economy will put upward pressure on interest rates. So far, however, we have not seen any signs of any significant moderation in the housing sector, although long term rates had already begun to rise in late September. Given the strength of the housing market, rising mortgage rates may slow sales, but tight supplies will probably work to move home prices higher, at least in the short-term.”
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 for offering a high-quality, cost-effective education.
Editors note: Chart accompanies column.
(Tara Rich, research assistant, contributed to this report.)
Contact
Bill Gerdes, UA Business Writer, 205/348-8318, bgerdes@cba.ua.edu
Source
Dr. Leonard Zumpano, professor of finance, chair of real estate and director, Alabama Real Estate Research and Education Center, 205/348-8988