Huntsville, Alabama Housing Market Report | March 2024

The housing market numbers  for Huntsville, Athens, and Morgan County in March 2024 showed a significant surge in inventory across North Alabama. With increases of up to 50% in some areas, sellers are navigating a shifting landscape as more homes enter the market. Despite a decrease in closed sales, pending sales show promise for the year ahead. While the market remains favorable for sellers, rising home values present challenges for buyers. Whether you're an experienced investor or a potential homeowner, this comprehensive analysis provides invaluable insights into crucial trends affecting affordability, and housing supply to keep you the most informed whether you're buying or selling a home in Huntsville, Alabama.

Huntsville, Alabama Market Overview

For buyers in the Huntsville, Athens, and Decatur markets, there's a mix of news. Let's start with Huntsville. The good news is that there's more supply across all submarkets, especially in Huntsville, where there's been a 30.2% increase. Housing supply now matches 2019 levels across North Alabama. While demand still outstrips supply, we're in a healthier position compared to the post-pandemic period, which bodes well for homebuyers.

On the flip side, the average sales price continues to climb, favoring sellers but making it tougher for buyers. The average sales price has risen by $6,000, from $368,000 to $374,000 compared to this time last year. This increase persists despite fewer homes sold in the Huntsville Metro area, with 536 homes sold this March compared to 651 last March, marking a 17.7% decrease. This decline is significant, especially considering that 2023 saw some of the lowest sales volume numbers across the US. Unfortunately, 2024 has started off even worse for Q1 than the previous year.

Athens, Alabama Market Overview

Athens remains a bright spot in the North Alabama market. The average sales price has soared by $16,000 year over year, from $343,000 to $359,000, putting it in close competition with the Huntsville market in terms of average sales price.

Supply in Athens continues to grow due to the market's attractiveness, boasting high-quality schools, a strong job market, and proximity to Huntsville and other employment opportunities. The market has seen a 50.1% increase in homes on the market, largely due to significant new construction in the Limestone County-Athens area. Despite a slight dip in the number of homes sold, with 176 sold this March compared to 184 last year, marking a 4.3% decrease, Athens fared better than Huntsville in terms of overall market performance.

Morgan County Market Overview

Buyers in Morgan County have some good news. The average sales price remained flat year over year at $265,000, failing to keep pace with inflation. However, sales were down, with 114 homes sold versus 127, indicating a 10.2% decrease, which aligns with market trends. Although Morgan County experienced a decline in the number of homes sold, there was a significant 48.3% increase in homes on the market.

It will be interesting to observe how this influx of supply affects prices moving forward into the spring and summer months, especially as prices have remained stagnant over the first quarter. With more homes entering the market and current demand levels, it's likely that Morgan County's price appreciation will remain subdued throughout 2024.

New Listings, Pending Sales, & Closed Sales

A significant advantage for buyers is the increase in new listings hitting the marketplace. That's up 5.8% year over year, from 1,318 listings this time last year to 1,394 in 2024. This surge suggests that despite the mortgage rate lockdown effect, more people are choosing to sell their homes and move forward with their lives. Life doesn't wait for interest rates to fluctuate; whether it's the need for diapers, graduation ceremonies, or new job opportunities, people are opting to list their homes now rather than wait for interest rates to drop.

Pending sales are also on the rise, marking a 10.6% increase. This is encouraging news for the overall market and for sellers currently listing their homes. In March 2024, there were 1,265 pending sales compared to 1,144 last March.

However, the number of closed sales has declined by 11.3%. This year saw 949 closed sales compared to 1,070 last March. This downward trend has persisted throughout the entire first quarter of 2024, with a decrease of just over 1%. While 2023 was a sluggish year for sales nationwide, 2024 seems to be following suit, though the increase in pending sales by 10.6% offers some optimism. The second quarter will reveal how the market for home sales in the Huntsville area unfolds.

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

Days on the market increased from 41 to 48, which is still a positive trend. We're still firmly in a seller's market in terms of days on the market and the available supply. The average sale price rose by 2.4% overall, from $332,362 to $340,346, and this increase will impact affordability as well.

With more supply entering the market, the percent of list price received has slightly decreased from 98.4% to 98.2% year over year. We're still above 97%, which indicates a balanced market. Typically, a 3% negotiation room is considered balanced between sellers and buyers. Currently, it's still leaning towards the seller's side. Although supply has increased from 2.5 months to 3.1 months, we're still below the four-month mark. The ideal range is typically 4 to 6 months for a balanced market. There are still not enough sellers entering the marketplace to achieve that balance.

Housing Affordability, Housing Supply, & Housing Inventory

Housing affordability has decreased year over year from the ideal score of 100 to 95. This decline means that the median-priced home is no longer affordable for the median household income in our area, dropping slightly from 100 to 95. The downside is that housing is less affordable in our area. However, the upside is that our housing remains much more affordable in the Huntsville area compared to many other parts or similar cities across the US, where housing affordability numbers are significantly below 100. With this number hovering close to 100 and potential interest rates possibly decreasing in 2024, we'll have to wait and see. If interest rates do decrease slightly, we might reach that score of 100 once again.

The good news for buyers is that the months worth of supply has increased from 2.5 months last year to 3.1 months in 2024. However, we're still below the desired range of 4 to 6 months, which is considered a balanced market. Therefore, we technically remain in a seller's market, reflected in listing to sales ratios ranging above 97%, with the current rate at 98.2%. More supply is simply needed to meet demand.

The positive development is that inventory is gradually increasing in that direction. Inventory has risen by 18.5% across the overall North Alabama area, from 2,601 homes last year to 3,082 homes this year, bringing us back to pre-pandemic levels of 2019. This is a step in the right direction. However, the challenge remains that 2019 was still not ideal due to the aftermath of the Great Recession and the resulting slowdown in home building, despite the increase in family formations in our area and across the US.

March 2024 Housing Market Takeaways

With an 18.5% increase in inventory across all the main markets in North Alabama, Huntsville is up by 30.2%, while the Athens and Morgan County areas are both up by around 50%. This marks a significant step in the right direction, as many people are now choosing not to let interest rates dictate their lives. Instead, they are moving forward with selling their homes and transitioning to their next residence.

Closed sales have declined by 11.3% in March, although pending sales are up year to date. For Q1, there is a 1.2% decrease year to date. Thus, 2024 seems to be starting off as a slower year compared to 2023. However, despite the hope of interest rates dropping and sales prices decreasing, home values continue to rise. Waiting for interest rates to decrease is proving to be a costly strategy for homebuyers, leading many to enter the market without much concern for interest rates and focus on finding the right home to move forward with their lives.

Even though inventory has returned to pre-pandemic levels of 2019, it remains only half of what was seen in 2015. Buyers are benefiting from having more options to choose from, but we are still technically in a seller's market. This presents a favorable opportunity for sellers to achieve their desired selling prices in this market.

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