The state’s housing market continued its decline into the new year but the decrease in sales was not unexpected in the winter. The organization did caution however, that the decrease in sales was expected during the winter months.
This was according to the latest report the Alabama Association of Realtors released this week.
The group said a number of factors have contributed to the decrease, including the nine-week drop in the average 30-year fixed mortgage rate, which began in early November and ended last month. In addition, mortgage rates increased by less than one-tenth of a point in January, rising from 6.62% to 6.69%.
The numbers have not improved in February either, with mortgage rates increasing again mid-month to 6.77%. Economists have blamed a combination of recent positive national economic news and higher than expected inflation for the upward pressure on mortgage rates, which in turn has reduced the likelihood of cuts to the feds funds rate target.
“Many homeowners are reluctant to surrender their current, locked-in, lower mortgage rates in order to purchase a new home with the current higher rates,” Alabama Realtors CEO Jeremy Walker said. “Until the Federal Reserve provides relief in the form of rate cuts, Alabama and other states will continue to battle the same economic headwinds that have plagued the industry for the last year.”
Realtors President Senia Johnson is optimistic on the market in the coming months.
“We believe the arrival of the spring and summer months will bring welcome activity to the housing market and help kickstart what we hope will be a turnaround,” she said.
There were 4,686 home sales in January, representing a 42.1% decrease year-over-year and the lowest sold dollar volume recorded in five years.
Austen Shipley is a staff writer for Yellowhammer News.
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