2023 Huntsville, Alabama Housing Market Report: Key Insights & 2024 Trends

In this comprehensive analysis, we explore the housing statistics for Huntsville, Alabama throughout 2023, offering insights into key trends and developments. Our focus extends to revisiting the predictions made for 2024, examining how the trends observed thus far in 2024 align with these forecasts. Despite a decline in total sales, we observe a consistent rise in average sales prices, indicating ongoing shifts in the local housing market. As we progress through 2024, we meticulously assess whether the anticipated changes in interest rates, home sales, and new construction activities correspond to our earlier predictions. This in-depth examination not only provides valuable insights into the current state of the housing market but also offers a nuanced understanding of how these trends may evolve in the coming months, guiding stakeholders in effectively navigating Huntsville's dynamic housing sector.

2023 Huntsville, Alabama Housing Stats

Total sales continue to decline from the peaks of 2020 and 2021. 2022 witnessed a downturn with 8,353 sales, further dropping to 6,796 in 2023, reaching levels dating back to 2017. This marks a total decline of 29% from the peak and a 20.6% decrease from the five-year rolling average.

Despite the overall decline in sales, approximately 30% from the peak, our average sales price continues to rise, up 2.3% from the previous year. The average sales price for 2023 now stands at over $375,000, a significant increase of 94.3% since 2013, showcasing the impact of inflation on home prices. Looking ahead, we anticipate another substantial increase in home prices over the next decade or so.

Days on market saw a significant increase from 2022 to 2023. In 2022, the average home sold in just 12 days, compared to 31 days in 2023, still reflecting a seller's market but notably lower than the peak of 115 days in 2014.

There is positive news for home buyers as inventory has increased by 47.5%. In 2022, there were 1,093 homes available on the market, which rose to 1,612 by the end of 2023. However, this remains 49.2% below the peak of 2014, indicating a shortage of homes on the market despite the increase in inventory.

This increase in inventory is reflected in the supply, which has risen from 1.6 months in 2022 to 2.9 months in 2023, a healthier figure. Ideally, a balanced market would have a 4 to 6 month supply, yet we remain in a seller's market, albeit less extreme than in previous years. While the supply is moving in the right direction, it is still significantly lower, approximately 63.4%, than the peak of 8 months in 2014, which was considered a buyer's market. Achieving a balance in the market requires a higher supply than the current 2.9 months in Huntsville.

Current Trends & 2024 Predictions

As we conclude 2023, let's dive into 2024 and the predictions we made.

The first prediction concerns interest rates. We're relying on the Fed's indication of three rate cuts in 2024. The impact may not be directly tied to these cuts as we're more influenced by the ten-year Treasury yield for 30-year and 15-year mortgages.

However, I believe these cuts will affect interest rates this year, particularly given it's an election year. Our forecast suggested mid-6% for commercial loans and high-5% for government loans. Yet, I anticipate slightly lower rates, possibly dipping into the low-6% range for conventional loans. I don't foresee rates exceeding the mid-6% range. My expectation is that unconventional loans will settle in the low to mid 6% range, with government loans around mid-5% by the end of 2024.

The second prediction pertains to home sales. Nationally, I predict 4.5 million home sales across the US, a decline from the peak of over 6 million homes witnessed a couple of years ago. However, this is an improvement from last year, and I anticipate a 10% to 15% increase in units sold.

While we're still awaiting all the local figures, everything we're observing suggests an upward trend, both locally within our company, Matt Curtis Real Estate, and in the broader Huntsville market. February marked our second highest sales month in recent years, despite it not typically being the strongest selling months. Units are moving, indicating a positive trend in the Huntsville market.

The third prediction concerns new construction. I anticipate a favorable year for builders as interest rates are likely to begin decreasing, possibly around this summer. I don't expect them to offer as many incentives.

Some builders have continued to offer incentives, while others have gradually reduced them as sales numbers improve. I believe this trend will persist in 2024, with new construction pricing playing a significant role in setting market standards. As builders can offer lower interest rates and other incentives, this will impact resale prices too. Many sellers of existing homes have struggled to compete with new construction incentives, but if builders scale back these promotions, existing home sellers may achieve higher prices without significant reductions, as we saw towards the end of Q4. Strong new construction in 2024 is likely to spill over into existing home sales.

Our fourth prediction pertains to rent prices. The consensus was that rents would continue to rise due to a larger pool of potential buyers opting for rentals amidst higher mortgage rates. I predicted a 5% increase in rent rates. However, I believe that prediction among the five predictions is the one that will prove to be incorrect.

Recent data on apartment complexes coming online in Huntsville, Alabama, suggests a significant increase in units in 2024 compared to 2023. We're facing an oversupply of apartment complexes, which will impact both apartment and single-family rents across the market. Instead of an increase, I anticipate a decrease in rent rates. However, this decrease might be skewed due to many apartment complexes offering free rent for one, two, or even three months. While this won't directly affect the average rent rate, it will certainly impact the rental market in Huntsville for 2024.

The fifth prediction concerns home values. I predict a 5% increase, although I initially suggested we might see double-digit growth if rates dropped to 5.5% or below. However, I don't anticipate rates reaching that low. Based on current home sales and the increasing inventory in the market, along with homeowners with low-interest mortgages opting to sell, a 5% increase seems like a healthy prediction for 2024. While demand is on the rise, so is supply, and I don't foresee demand surpassing supply in 2024. Therefore, I believe a modest 5% increase is likely for the year.

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