Alabama’s housing market continued its steady path toward recovery through the first half of 2025, with gains in sales, prices, and inventory helping bring conditions closer to pre-pandemic patterns. Despite economic uncertainty, key indicators suggest the market is stabilizing and approaching a new normal.

Now, Alabama REALTORS® has released five key predictions for what’s ahead in the second half of the year–and more importantly, what those trends could mean for your next real estate move.

Here’s what’s happened so far, what experts expect next, and how you can use that insight to make smarter real estate decisions in 2025.

Signs of a Market Returning to Balance

In June, Alabama recorded 6,724 home sales, an 8.2% increase from May and 660 more sales than the same month last year. The median sales price rose to $233,458, reflecting a 1.4% monthly gain and a 2.0% increase year-over-year.

Sold volume reached $1.86 billion, up 9.4% from May and 26.5% higher than last June, pointing to renewed strength and buyer confidence in the market.

Inventory also continued to climb, with 20,298 active listings at the end of June–22.7% more than the 16,549 listings available a year ago. This expanding selection is offering buyers more choices than they’ve had in years.

Labor market strength is further stabilizing demand. Alabama’s unemployment rate has held steady at 3.3% for eight consecutive months, and labor force participation reached a record 57.9% in April, helping to support more homebuyers entering the market.

5 Market Predictions—and How to Use Them

1. Interest Rates Will Continue to Normalize

Mortgage rates have settled into the 6.5–7% range, moving closer to long-term historical averages after the ultra-low rates seen during the pandemic. According to AAR economist David Hughes, “I suspect that borrowing costs, which seemed high compared to pre-pandemic days, are starting to feel normal again.” He notes that after the pandemic, many buyers and sellers waited on the sidelines for economic forces to return to what they expected as “status quo.” “To a certain extent they never did, and you can’t expect individuals to sit out of the housing economy forever.”

How to Act:

• Buyers: Focus on what you can afford now—not what interest rates used to be. Waiting for 3% rates to return may mean missing out on the right home, price appreciation, or valuable equity gains.
• Sellers: Price with strategy. Buyers have adjusted to today’s rates, but they’re still cost-conscious and savvy about financing. A well-staged, properly priced home can still sell quickly—but expect a more traditional market pace.

2. The Political Landscape Could Drive Mixed Signals

The current political environment has brought a growth-friendly climate to Alabama’s housing market, but trade disputes and tariffs may introduce volatility. Hughes commented, “I suspect that the change in presidential administrations has been a boon to the housing economy, but I’m still awaiting a market response to uncertainty from trade disputes.” He adds, “We’ve yet to see the inflationary effects many economists believe could accompany higher tariff rates.”

How to Act:

• Buyers: Consider locking in a rate or purchase before potential inflation or cost increases tied to trade disputes. Higher tariffs could drive up prices on everything from building materials to appliances.
• Sellers: Be aware of rising construction or renovation costs, which may affect your competition—or your own plans to update a home before listing. Stay flexible and informed as the policy landscape evolves.

3. Seasonal Trends Will Hold

Alabama’s housing market is expected to follow its traditional seasonal cycle, with stronger activity during the warm months before slowing as colder weather and the holiday season approach. Hughes explains, “We typically see some seasonality in prices, with annual highs in early-to-mid summer. Past that point, prices generally ease heading into the winter months, reflecting lower demand during the colder months. I anticipate we will see that typical seasonality on display.”

How to Act:

• Buyers: If you’re shopping now, understand you may face more competition during peak season—but also more inventory to choose from. As fall approaches, opportunities to negotiate may increase.
• Sellers: Summer remains your best bet to list for top dollar, with more active buyers in the market. If you’re planning a fall or winter sale, lean into strong marketing and realistic pricing to attract motivated buyers.

4. The Labor Market Will Support Demand

With Alabama’s unemployment rate lower than the national average and labor force participation rising, more households are positioned to enter or move up in the housing market. Americans have also been reducing non-mortgage personal debt, which could bode well for consumers—especially first-time buyers.

How to Act:

• Buyers: Take advantage of a strong job market to secure mortgage pre-approval and lock in competitive financing. Lower personal debt could improve your credit score and broaden your options.
• Sellers: Expect continued interest—especially from first-time buyers—driven by job growth and stable income. Homes that are move-in ready or cater to working families may attract special interest.

5. Plenty of Listings, But Construction Uncertainty Looms

Active listings in Alabama have risen to their highest levels since 2020, providing buyers with more options and helping to stabilize the market after years of tight supply. However, builder sentiment in the South has dropped to its lowest level since 2012, reflecting concerns over high costs and cautious buyer demand. Alabama’s construction sector was the only major industry to report job losses from March to April, shedding 1,400 positions.

How to Act:

• Buyers: With inventory up, this is a smart time to comparison-shop and negotiate. However, don’t assume supply will keep growing—construction slowdowns could tighten options in 2026.
• Sellers: You may be competing with more homes, so it’s essential to stand out. Highlight what makes your home special—whether it’s condition, upgrades, or location—and work with a REALTOR® to market it strategically.

The Bottom Line

Rather than a boom or bust cycle, Alabama’s housing market is showing signs of long-term health and balance. Higher inventory, solid employment figures, and rising buyer activity all suggest a more stable playing field.

But with policy shifts, construction slowdowns, and affordability pressures still in play, staying informed—and making proactive decisions based on data—will be key to navigating the rest of 2025 with confidence.