New home sales in Alabama increase 3% in June

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Alabama new home sales in June increased 2.6 percent from the same period a year earlier. After disappointing sales volume in April and May, it's encouraging news to get back in the "plus" column when comparing data to prior year performance. With the primary home buying season currently in full swing, all eyes will continue to closely watch the market during the balance of the summer for final hints for what the market can anticipate for the remainder of the year. Total new home sales through June are currently 2.6 percent behind the same period last year.

View full sizeAlabama new home sales improve 3% in June compared to last year. New home inventory down 4% from June 2013. Infograph courtesy of ACRE. All rights reserved.

Demand: June new home sales in Alabama's five metro markets, representing approximately seventy percent of all statewide transactions improved 15.5 percent from the prior month and consistent with seasonal buying patterns. After the month of May's results were none of the five metro areas experienced a year-over-year (compared to last May) increase in new home sales, June pivots to reflect Montgomery(18%), Birmingham(8%) and Huntsville(5%) experiencing positive sales growth from last year. Through mid-year, Birmingham is the only market with positive (5.6 percent) new home sales growth from the same period a year earlier.

Supply: Despite sluggish sales, new construction inventory was 3.8 percent lower than last June as new homes in the pipeline has slowed. With that said, two of five metro areas have experienced a rise in inventory from last June that include Montgomery (up 7%) and Tuscaloosa (up 8%).

Alabama's metro markets in June  reflect 4.5 months of new home supply, down 13.4 percent from last month and down 6.3 percent from 4.8 months a year ago.

Pricing: Alabama's metro market's median new home sales price in June was $235,313, an increase of 1.1 percent from last June and 2.8 percent above last month.

New Home Pipeline: June statewide housing starts decreased by 6.8 percent from June 2013 but up 3.2 percent from the prior month. Housing starts were up 7.8% in 2013 and 6.5% in 2012. June statewide building permits were down .8 percent from June 2013 but up 7.4 percent from last month. Building permits were up 5.6% in 2013 and 8.4 percent in 2012.

Residential Construction Employment: According to the Alabama Dept. of Industrial Relations, statewide residential construction employment in June slipped .5 percent (-300 jobs) to 64,100 from last month and also fell 2.4 percent (-1,600 jobs) below the same month a year ago.

Local Results: 11 out of the 27 home builder associations (41% - down from 48% in May) reported gains in building permits from the prior month (May'14) while 12 associations (44% - same as May) reported gains in housing starts from last month. NIne associations (33% - up from 30% last month) experienced an increase from their June 2013 housing starts.

Industry Perspective: "An improving job market goes hand-in-hand with a rise in builder confidence," added David Crowe, chief economist for the NAHB. "As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home." Alabama's gradual but less than robust job growth is consistent with new home sales posted thus far in 2014.

Big Picture for Alabama - Annual Lens. For the second consecutive year since the Center began collecting new construction data in 2008, Alabama new home sales in 2013 experienced growth from the prior year. In 2013, sales were up 5.8 percent. In 2012, sales were up 7.2 percent compared to declines of 13.0 percent in both 2010 and 2011.

This monthly report is provided compliments of the ACRE Corporate Cabinet.

View the current monthly Alabama Residential Report here."

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