As Alabama enters the final stretch of 2025, the state’s housing market stands at an important crossroads.

After several years of post-pandemic fluctuations, ranging from rapid price growth to strained inventory, conditions have begun to level out.

Buyers who spent the last few years competing in tight markets are finding more options, while sellers who built significant equity during the boom remain well-positioned heading into the new year.

Economic indicators are stabilizing, and industry experts are closely watching consumer trends as Alabama looks toward 2026.

With more balanced conditions on the horizon, moderate price appreciation expected, and continued affordability compared to other states, here’s what buyers and sellers can look forward to in the year ahead.

Current Momentum and Price Trends

Throughout 2025, home values across regions like Birmingham, Huntsville, and Mobile continued to rise at a healthy pace, supported by Alabama’s expanding economic footprint in aerospace, manufacturing, and technology.

This momentum is expected to carry into 2026, with many markets projected to see moderate appreciation between 4-7%. For buyers, this keeps Alabama one of the most affordable states in the nation; for sellers, it preserves the opportunity for meaningful returns without the runaway price spikes of the recent past.

Economist Dr. Evan Moore says that improving inventory is a major factor shaping expectations for the coming year.

“The housing market will be more balanced in 2026, as supply is increasing and there will likely be 5-6 months of supply available for much of the year,” Moore notes. He cautions that while sellers can still anticipate price gains, “sellers should expect moderate price appreciation, but nothing like the price increases seen in 2021 and 2022.” 

Challenges persist on the new-construction side.

“The supply of new homes will continue to face hurdles, such as higher material costs due to tariffs, potential labor scarcity stemming from immigration policy, and first-time buyers having difficulty with down payments,” Moore explains.

These pressures may not halt growth, but they could influence how quickly new supply reaches the market.

Affordability and Buyer Opportunity

Affordability remains one of Alabama’s most significant advantages, a dynamic that economist David Hughes believes will continue to shape the state’s trajectory in 2026.

“If current trends in pricing and inventory hold, buyers should feel encouraged about their ability to afford a home in Alabama,” he says.

“Sellers should be encouraged by the prospect to profit nicely off of a home sale with regard to enhanced equity.” 

Hughes points out that inventory has returned to levels not seen since the pre-pandemic years in Alabama, a shift that gives buyers more negotiating power while still supporting seller confidence. With purchasing a home in Alabama significantly more affordable compared to many other states, the state continues to attract new residents.

“There is little evidence to suggest that homes in the state will become significantly less affordable in the coming year,” he notes.

Still, Hughes notes several potential headwinds. Economic pressures, including higher foreclosure rates, increased delinquency on car loans, and rising credit card defaults, signal growing strain on household budgets.

“Many student loan borrowers are feeling the renewed burden of monthly payments, and inflation on everyday necessities only serve to put the average consumer, particularly younger ones, in a precarious financial position,” he says.

Hughes cautions that these types of financial stressors, combined with the uncertainty they create, could “be sufficient to take the wind out of the sails of the current state housing market” even as long-term fundamentals remain strong.

Outlook for 2026

Looking ahead, Alabama’s housing market in 2026 is expected to reflect a blend of opportunity, stability, and measured growth.

Rising inventory will continue to restore balance, moderate price appreciation will keep affordability in reach, and the state’s expanding economy will provide a solid foundation for continued demand.

While national financial pressures and consumer challenges deserve close attention, Alabama remains better positioned than many states to navigate the shifting economic landscape.

For both buyers and sellers, the year ahead offers a market defined not by uncertainty, but by renewed equilibrium and steady confidence.