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Alabama Year-End Residential Report: Sales up 3.4% in 2014; 68% of local markets improve from 2013
Click here to view or print the entire December report compliments of the ACRE Corporate Cabinet.
View full sizeAlabama home sales up 8% vs December 2013. 2014 sales were up 3.5%. December sales up 32% from bottom in 2008. Infograph courtesy of ACRE. All rights reserved. Alabama residential sales in 2014 improved by 3.4 percent from the prior year. This represents the fourth consecutive year of positive sales growth for Alabama's residential real estate industry. In 2013 sales grew 10.2 compared o the prior year. In 2012 sales grew 5.9 percent year-over-year. In 2011, sales grew by 2 percent ending a six-year period of declining sales including 2010 that saw sales decline 4 percent.
Across Alabama in 2014, 68 percent of local markets reported positive sales growth over the prior year. This figure was 80 percent in 2013.
ACRE's Alabama sales forecast for 2014 projected 45,320 closed transactions while the actual sales were 44,615 units, a 1.6 percent cumulative variance.
Alabama sales were sluggish during the first half of 2014 for most markets across the State. Momentum began to favorably turn with a 4.1 percent sales increase in the third quarter compared to 2013 and an even stronger finish during the fourth quarter -up 5.8 percent.
Housing inventory is virtually unchanged from 2013, a small favorably decline of .8 percent or 238 units.
The median sales price has improved by approximately 4.8 percent from 2013. Across Alabama in 2014, 76 percent of local markets reported positive growth in pricing over the prior year. This figure was 44 percent in 2013. Still, Alabama remains below the nation's recent pace of appreciation but the Center prefers gradual increases in pricing over double-digit spikes seen in many parts of the country (typically in markets hardest hit by the recession).
Month of December: Alabama residential sales totaled 3,494 units in December, a strong finish that represents 8.0 percent growth from the same period a year earlier and 191 units favorably above our monthly forecast.
December represents the sixth consecutive month whereby sales have eclipsed last year's pace and this trend is consistent with sentiment expressed by industry professionals in the Center's 2015 Q1 Alabama Real Estate Confidence Index (ARECI). Nationally, December sales were 3.5 percent above the same period last year. See more details of how Alabama compares to the broader US market here.
In December across Alabama, 60 percent of local markets reported positive sales growth compared to last December. In comparison, this figure was 60 percent in November, 84 percent in October, 76 percent in September, 64 percent in August and 48 percent in July.
View full sizeAlabama housing inventory in December was virtually unchanged from last year. December inventory now down 21% from the December peak in 2007. Infograph courtesy of ACRE. All rights reserved. Supply: The statewide housing inventory in December was 31,203 units, a decrease of .8 percent from December 2013 and 21.4 percent below the month of December peak in 2007 (39,706 units). There was 8.9 months of housing supply (8.0-8.5 months NSA considered equilibrium during month of December) in December 2014, which represents a 8.1 percent favorably drop from December 2013. December inventory decreased 5.0 percent from the the prior month. This direction is consistent with historical data that indicates December inventory on average (09-13) traditionally decreases from the month of November by 5.1 percent.
Demand: As anticipated, December statewide residential sales increased 13.7 percent from the prior month. While at a higher and more favorable percentage change, this direction is consistent with seasonal trends & historical data that indicates December sales, on average (09-13), increase from the month of November by 2.0 percent. Sales during the month were 32.4 percent above the month of December bottom experienced in 2008.
Pricing: While the return of more consistent year-over-year sales gains during the second half of the year is encouraging news, the story in 2014 relates to pricing. The Center shared thorough the year that pricing represented the primary indicator that still had the greatest upside in the future. As highlighted above, this has come to pass. With that said, there was some softness in pricing in December and in general, the fourth quarter, as sellers became more aggressive - which in-turn spurred the increase in demand. Despite four years of year-over-year sales gain, many markets still favor the buyer. In December, only 9 of 25 local markets experienced price gains from December 2013. Keep in mind that pricing can fluctuate from month-to-month due to sampling size of data and seasonal buying patterns. The median sales price was unchanged from last December and was only .2 percent above the prior month. This direction is consistent with seasonal and historical data (09-13) that reflects that the December median sales price traditionally increases 3.5 percent from the month of November.
Seeking Balance: Eleven or 44 percent of local markets are considered near or in balance where buyer and seller enjoy equal bargaining power in December. This direction is up from 28 percent in November. Even better news is that all metro markets (representing 5 of the 11 & 70% of all statewide sales) are in or near balance.
In contrast to reports of lack of inventory at the national level, Alabama still has a significant level of housing supply in most local markets (14 of 25 markets or 56 percent still have 10.0+ months of supply) but the supply of "quality" inventory is limiting sales according to some local professionals with boots on the ground.
National Industry Perspective: "The housing market is likely to continue its gradual climb upward next year after a sub-par 2014," according to Doug Duncan, senior vice president and chief economist at Fannie Mae. "We anticipate a fairly strong increase in housing starts in response to stronger employment and some improvement in related household incomes. As a result, that may help to unfold some of the suppressed household formation numbers and incent builders to meet some of that increased demand. For all of 2015, we expect total housing starts to increase by about 22 percent and total home sales to rise approximately 5 percent, with total mortgage originations ticking up slightly to $1.13 trillion." For full report, go HERE.
This monthly report is provided compliments of the ACRE Corporate Cabinet.
2013 Alabama Residential Recap - Sales Up 10%
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