HAS THE SLUGGISH ECONOMY REACHED THE HOUSING MARKET?
- August 7th, 2019
|HAS THE SLUGGISH ECONOMY REACHED THE HOUSING MARKET?
The Alabama housing market took a hit in April, according to statistics released by the Alabama Real Estate Research and Education Center at The University of Alabama.
Total homes sold declined 6.76 percent from March’s 3,202 to 2,987. Montgomery had the biggest decline in number of homes sold with a loss of 40 sales (304 homes sold in April from 344 in March), while Phenix City saw the largest percentage decline with a 40.8 percent loss (42 homes sold in April from 71 in March).
Average selling price slipped 8.17 percent to $107,797 from $117,383. Total homes listed inched up 2.5 percent to 27,005 from 26,334. For all intents and purposes, average days on market held steady with a loss of only one day to 154 from 155.
“April’s decline was expected,” said Dr. Leonard Zumpano, director of the Center. “Eroding employment figures and consumer confidence together with rising mortgage rates were expected to ripple through the housing sector and will probably continue to do so in the short term.
“It is important to keep in mind, however, that when compared to April 2000, April 2001’s housing numbers are notably resilient. Total homes sold are actually up 6.79 percent from 2,797, while average selling price is down 6.84 percent from $115,707. Year to date, 2001 total homes sold is up 3.37 percent to 10,635 from 10,288 in 2000, while average selling price is up 2.72 percent to $115,789 from $112,722.”
The national housing market slowed as well. According to the National Association of Realtors®, April sales of existing single-family homes slipped 4.2 percent to 5.2 million from 5.43 million. Average selling price was up only 1 percent to $181,300 from $179,500.
April’s sales activity was still 4.4 percent above last year’s pace of 4.98 million, while average selling price is up 4.6 percent from $173,300 in April last year.
Zumpano noted the Commerce Department in April changed the method it uses to calculate new home sales.
“The new system no longer takes into account new homes under construction before permits were issued. This method caused a larger than normal discrepancy between National Association of Realtors’® numbers and the Commerce Department’s. For consistency, The Alabama Real Estate Research and Education Center has used NAR’s housing numbers for comparison and analysis of the Alabama housing market with the national housing market.
“While the numbers do point to a slowing housing market, the state and national figures still look healthy when compared to last year,” Zumpano said. “It is also important to keep in mind that March set the second-highest home sales pace on record, so a decline from March could be expected in nearly any market conditions, especially with rising unemployment and eroding consumer confidence.
“Total non-farm employment shed 223,000 jobs in April, while the consumer confidence index dropped to 109.2 from 116.9. On a good note, the Consumer Conference Board reported on May 29 that the Consumer Confidence Index snapped back to 115.5 in May, which could signal that consumers are not ready to reign in their spending just yet. There is still a significant amount of strength remaining in the market, but if unemployment continues to rise, consumer confidence could falter, and further declines could be seen.”
The University of Alabama Culverhouse College of Commerce and Business Administration, founded in 1919, is home to the Alabama Real Estate Research and Education Center. The Center works with the Alabama Association of REALTORS, the Alabama Real Estate Commission and the research division of the National Association of REALTORS to compile a state housing affordability index each quarter.