Huntsville, Alabama Housing Market Report | January 2024

Get the latest insights into the Huntsville, Alabama housing market, focusing on key metrics such as average sales price, number of homes sold, and housing affordability. This analysis sheds light on notable trends and shifts in the market, including the impact of recent ice storms on sales and predictions for interest rates. Whether you're a prospective buyer or seller, understanding these dynamics is crucial for navigating the current real estate landscape effectively.

Huntsville Housing Report

Let's start by looking at the Huntsville submarket. The average sales price in Huntsville has gone up by $40,000 compared to last year, from $346,000 in January 2023 to $386,000 in January 2024. That's an 11.5% increase for the Huntsville market.

The total number of homes sold stayed pretty much the same, dropping by only 2.6%. We saw 378 homes sold this year versus 383 homes sold last year at this time. Actually, I'd say that's more like an increase. The reason for that is because the closing offices were shut down for almost a week due to ice storms in January. So, a lot of those closings got delayed, meaning the 2.6% drop was probably more like an increase. We'll see that reflected in the February numbers. We've also noticed a 16.4% increase in the overall number of homes on the market. We'll discuss the specifics of listings in just a moment, but it's worth mentioning that the number of listings seems to be down across the market. However, I think that number might be off in January because of that one week where the market slowed down due to the ice storm.

Athens Housing Report

Now, let's look at the Athens, Alabama market. The average sales price has also risen in the Athens market, increasing by $28,000 compared to last year, from $354,000 this time last year to $382,000, which is very close to that of the Huntsville market. The fact that Athens is priced similarly to the Huntsville market truly speaks to all the efforts the city of Athens has made in terms of development, schools, and various projects, which have significantly boosted the overall value of homes in that market. There were 16.3% more homes sold year over year, with 98 homes sold compared to 114 this January.

Additionally, there's been a substantial increase in supply. The number of homes on the market has surged by 36.6%, which is remarkable considering the significant increase in price.

Morgan County Housing Report

Now, let's turn our attention to the Morgan County, Alabama market, which is our more affordable market encompassing Decatur, Hartselle, and Priceville areas. The average sales price has increased by $20,000 year over year to $246,000, reaching $266,000 this January 2024. This figure still remains well below the average sales prices for Huntsville and Athens, indicating a high score on the housing affordability index, well above 100. Thus, there's a significant amount of affordable housing in the Morgan County area.

Moreover, there's been an uptick in the number of homes sold. With prices rising in Huntsville and Athens, there has been a noticeable increase in home sales in the Morgan County area, with 13.9% more homes sold, totaling 82 compared to 72 previously. New construction has also contributed to this trend, particularly in the Priceville market. Additionally, there's been a substantial influx of homes on the market, with a 40.7% increase in listings. This can be attributed to more builders venturing into this area due to its affordability, lower lot and land costs, enabling them to offer more affordable prices for first-time homebuyers and those seeking properties within an affordable price range.

New Listings, Pending Sales, & Closed Sales

For the overall market, new listings have actually decreased to 933 compared to 1,111 this time last year, marking a 16% decrease. Once more, I don't place too much emphasis on this decline, considering we experienced just one week of closure due to the ice storms. I believe this greatly impacted the process of getting new listings active on the market. I expect much higher numbers in February.

Pending sales also saw a slight decrease of 5.3% for the overall market, with 947 pending sales compared to 1,000 last year. Again, this could be attributed to the effects of the ice storms, as people were restricted in their ability to go out and view homes for that week.

Closed sales also experienced a decline of 2.5%, totaling 661 compared to 678 in January 2023. Considering the week-long shutdown, this was likely the primary factor influencing the decrease.

Days on Market, Average Sales Price, & Percent of List Price Received

Days on the market have slightly increased from 36 to 42, still indicating a slight seller's market. It doesn't quite feel that way, given that we've shifted from an extremely strong seller's market just a couple of years ago. However, we are still somewhat below average in terms of the number of months' worth of supply and the speed at which homes are selling on the market.

Prices have risen across Madison County, Limestone County, and in Morgan County. The average sales price has also increased across the Tennessee Valley, rising by 4.3%, although not nearly as much as in those three submarkets. In January 2023, the average sales price was $330,944, whereas now it stands at $345,185 for the Tennessee Valley.

The percentage of the list price has slightly decreased. Previously at 98%, it has now dropped to 97.8%, still leaning more towards the seller's side, although not as significantly as when we were seeing numbers above 100%. The 97.8% figure is gradually improving. Ideally, we would like to see it around 97%. However, I believe the numbers aren't fully reflective of reality because much of the negotiation is concealed in the MLS, where it doesn't show the actual seller concessions that many builders are making, particularly regarding interest rates. If we were to factor those concessions in, I believe it would bring us closer to that 97% level.

Housing Affordability, Housing Supply, & Housing Inventory

The main concern here is housing affordability. Unfortunately, housing supply is currently at a 40-year low in the country. Mortgage payments have risen from an average of $1,000 a month just a few years ago to about $2,000 a month. As a result, our housing affordability index for Huntsville and across the US has significantly dropped. This time last year, we were at 95, and this year we're even lower at 89.

Yet, there are some positive signs. With the Fed signaling three rate cuts this year, many predict that interest rates will drop towards the low 6% range by the end of the year. If that happens, we can expect the housing affordability number to increase, probably approaching around 100. This is the ideal number where the median household income can afford the median price range home. A score of 100 is what we're aiming for. However, the lower interest rates go, the more likely prices are to increase, as we still have a shortage of supply in this market.

Housing supply has increased from 2.5 months this time last year to 3.1 months now. Technically, we're still in a seller's market. Anything below the 4 to 6 month window, particularly below four months, is considered a seller's market. However, it doesn't quite feel like it compared to the extreme seller's market we've experienced over the past couple of years.

Housing inventory has also gone up by 9.5% year over year. Last year, we had 2,744 listings for January, whereas now we have 3,005 listings for the Tennessee Valley area. I expect this number to rise even more, primarily due to seasonality. Additionally, upon looking at our pipeline of listings about to go active on the market, we have more listings lined up to go on the market at Matt Curtis Real Estate than homes currently on the market.

We should anticipate a flood of inventory this spring, giving buyers plenty of options to choose from. It will be an excellent season for buyers and also a great opportunity for sellers to take advantage of this market, especially with the prospect of lower interest rates hopefully arriving in 2024.

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