Huntsville, Alabama Housing Market Report | May 2024

In the May 2024 North Alabama Real Estate Market Report, we explore the latest housing trends in Huntsville, Athens, and Morgan County. This analysis highlights key metrics such as average sales price, days on market, and housing affordability. From substantial inventory increases to shifts in buyer-seller dynamics, we provide a detailed overview of the current market landscape. Whether you're looking to buy or sell in Huntsville, these insights will help you navigate the evolving real estate market in North Alabama.

Huntsville May 2024 Housing Market Report

In the Huntsville market, the average sales price remained flat year over year at $387,000, which is below the national average of around $430,000 to $440,000. Huntsville is more affordable than the rest of the country. There was an 8.7% increase in the number of homes sold, with 723 homes sold compared to 618 last May.

The significant news for Huntsville is the increase in the number of homes on the market, with a 48.4% rise, totaling 2,167 homes compared to 1,460 this time last year. Looking at the entire Tennessee Valley, there are approximately 800 additional homes on the market year over year for the entire region.

Athens May 2024 Housing Market Report

Now, let's examine the Athens market. The key point is the average sales price increased by $16,000, reaching $382,000 compared to $366,000 last year. Athens' average sales price is almost the same as Huntsville's. With the new schools and infrastructure being developed in Athens, it is a hot market, and its proximity to Huntsville adds to its appeal.

Many consider Athens the "new Madison." Madison is nearly landlocked with limited room for new development, while Athens still has plenty of space for new construction, which contributes to its current success.

There was a decrease in the number of homes sold, with a 15.3% decline year over year. 180 homes were sold this May compared to 228 last year. However, there was a significant increase in the number of homes on the market, a 56.2% rise, with 367 homes available versus 219 last year.

Similar to Huntsville and the rest of the Tennessee Valley, this increase in homes—800 across the area—is positive as it returns us to pre-pandemic supply levels.

Morgan County May 2024 Housing Market Report

Morgan County remains strong. The average sales price increased by $10,000 year over year, reaching $271,000 compared to $261,000 last May. There was also an increase in the number of homes sold, with 143 homes sold in May 2024 versus 124 last year, marking a 17.3% increase. Additionally, there was a significant rise in the number of new homes on the market, with a 67.6% increase year over year, totaling 310 homes compared to 167.

More buyers are attracted to the affordability of Morgan County, where the average sales price is below $300,000. This price point is favorable for the housing affordability index and aligns well with the median household income for the Huntsville market.

New Listings, Pending Sales, & Closed Sales

Overall for the Tennessee Valley, new listings and overall inventory are significant stories. We have 1,621 new listings versus 1,419 this time last year, a 14.2% increase. Many people are tired of waiting for the Fed to adjust interest rates. There's uncertainty about when this will happen, and if it does, it might only be one rate decrease this year, which likely won't significantly impact 30-year or 15-year rates. This adjustment signals to the overall economy and businesses that the Fed is done raising rates. People are moving on with their lives, listing their homes, and making changes regardless of Fed actions.

Pending sales are down slightly year over year by 2.8%, with 1,126 this year versus 1,158 in May of last year, showing relative stability. Closed sales are up 6.2% year over year, with 1,205 this year compared to 1,135 last year.

Homes Sold, Days on Market, & Average Sales Price

Overall, the market is relatively flat year over year in terms of the number of homes sold. Nationally, we're on pace to sell about 4 million homes across the US, while the average is more around 5 million. During the COVID era, we saw over 6 million homes sold, so we are down significantly from that peak. Much of this is due to the mortgage rate lock-down effect. With more listings becoming available and interest rates potentially decreasing, we might return to selling 5 million homes.

Days on market increased slightly from 38 to 41 days, still below what is considered a normal market. We are getting closer to that normal market. The average sales price increased by 3%, from $348,470 last year to $359,022 this year. While 3% might not seem like much, if you put down 10% on a home, a 3% increase translates to a 30% return on your initial down payment. With even lower down payment loans, this could mean doubling your money year over year.

Percent of List Price Received & Housing Affordability

The percent of list price received has remained relatively flat year over year, slightly decreasing from 98.6% to 98.4%. The average negotiation range I consider healthy is 97%, and we're currently between 97% and 100%, which was typical during the COVID years. We are seeing more negotiations in the marketplace, but we need more supply to bring that number down to 97%.

A continuing major story is housing affordability, not only in Huntsville and the Tennessee Valley but across the country. The housing affordability index has decreased from 94 last year to 89 this year. A score of 100 means a median household income can afford a median-priced home. Currently, the median household income cannot afford the median-priced home in our area. This is why areas like Morgan County and other outlying counties are performing better, as people seek more affordable options.

If interest rates decrease, expect the affordability index to get closer to 100. As it approaches 100, home prices might rise, which could become the new normal. We might remain below 100, around 95, for quite some time. The good news is that we are more affordable than many competitive cities across the country.

Months of Supply & Inventory

A positive development for buyers is that supply has increased from a two and a half months supply last year to three and a half months this year. This means if no new homes were listed, it would take three and a half months to sell all existing homes on the market. A healthy number is 4 to 6 months, considered a balanced market. Currently, we are technically in a seller's market, but it feels more balanced due to increased inventory and more negotiations.

Inventory is up 31.2%, with over 800 additional homes available. Last year, there were 2,618 homes available, and now there are 3,436. This increase does not indicate a market crash but rather a return to pre-pandemic 2019 levels. We are still below the inventory levels seen in previous decades but are improving. Many people are listing their homes as they move on with their lives, no longer waiting for interest rates to drop, and are entering the next stage of their lives.

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