2024 was a year of significant shifts and steady growth for Alabama’s housing market. After a somewhat slow start, the market experienced a remarkable turnaround during the spring and summer months. Increasing inventory, stabilizing prices, and rising sales activity characterized this period. A combination of factors, including decreasing mortgage rates and a robust job market, contributed to this positive trajectory. While the fall brought a slight slowdown, the overall year was marked by positive growth. Let’s take a month-by-month look at Alabama’s resilient housing market in 2024.
January 2024 marked a challenging period for the Alabama housing market, with sales declining for the seventh consecutive month and reaching a five-year low in terms of dollar volume. Despite this downturn, a silver lining emerged in the form of increased affordability. Median and average sales prices decreased compared to the previous month, suggesting a shift towards more affordable housing options. As Senia Johnson, 2024 President of Alabama REALTORS®, noted, “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.” And indeed, the housing market experienced a significant turnaround in the following months.
In February, the Alabama housing market showed signs of recovery, with home sales increasing for the first time since June 2023. The median sales price continued its downward trend, making homes more affordable for buyers. Additionally, an increase in housing listings set the stage for a promising spring selling season.
As spring arrived, the housing market warmed up, with sales and listings steadily increasing throughout March, April, and May. Foreclosures declined, and the median sales price reached its lowest point since March 2021, making homes more affordable for buyers. Additionally, average 30-year mortgage rates decreased by 19 basis points in May, reaching 7.03%. This decline, coupled with lower interest rates in June, attracted more buyers to the market, just in time for a hot summer selling season.
By June, the market had recovered from its early-year lows, signaling a positive outlook for Alabama’s economy. Steady increases in home sales and prices indicated strong buyer and seller confidence. Listing levels rose close to early 2020 levels. Alabama’s job market continued to strengthen, with seven straight months of job growth, further supporting the housing market. July saw the highest sales volume of the year, and mortgage rates hit a year low of 6.47%. With increasing housing inventory, Alabama’s housing market was well-positioned for continued growth.
While favorable mortgage rates continued, the summer home-buying season cooled off in August, leading to a slowdown in sales. In September, the market shifted, with a decrease in sales volume and an increase in active listings, creating more opportunities for buyers. Alabama’s inventory levels approached five to six months of supply, a historically healthy market indicator.
This shift in the market, with decreased sales and increased listings, offered relief to buyers who had faced challenges in recent years. Inventory levels reached a five-year high and continued to increase for eight consecutive months, providing buyers with more options and reducing the pressure to meet seller demands or engage in competitive bidding wars.
The Alabama Association of Realtors predicts that uncertainty may persist in the final months of 2024, particularly regarding interest rates. While mortgage rates fluctuated in September and October, they remained above 6%. Given that 80% of mortgage-holding Alabamians have a rate below 6%, many may not be motivated to enter the market at current rates.
Monthly home inventory remains an area of uncertainty in the Alabama market. While inventory increased in the fall and is moving in the right direction, it still falls short of the ideal six-month supply. As the year concludes, both buyers and sellers may choose to wait for more stable economic and political conditions before making major decisions. As 2024 draws to a close, the Alabama housing market has proven its resilience, offering valuable lessons and setting the stage for a dynamic 2025.
