Huntsville, AL Housing Market Report | October 2023

The Huntsville, Athens, & Decatur Housing Market Report offers a comprehensive view of North Alabama's real estate scene. Focusing on major cities like Huntsville and Athens, the report provides insights into price growth, housing affordability, and sales trends. Huntsville's escalating prices have impacted affordability and sales volumes, while Athens stands out with a higher average sales price, attracting families seeking quality living in smaller-town settings. The report also addresses Morgan County's growth and the increased demand for affordable housing, aligning with Decatur's thriving job market. Detailed discussions on market supply, pending and closed sales, days on the market, and list price received provide a deeper understanding of the region's real estate dynamics. Additionally, the report highlights Huntsville's declining housing affordability index, underscoring the need for sustainable solutions to ensure accessible housing for essential workers and maintain local economic stability.

Huntsville, Athens, & Decatur Housing Market Report

We'll discuss the overall real estate market in North Alabama, but first, let's take a look at some major cities in the North Alabama area. Let's begin with Huntsville. Huntsville has led the way in price growth, experiencing a significant 4.5% increase in the average sales price year over year. Last year, it was at $374,000, and now it's at $391,000, marking a $17,000 increase. This is noteworthy, especially considering the higher interest rate environment in the past 12 months.

This situation has greatly impacted affordability in the Huntsville area. Higher prices and interest rates have unquestionably affected both affordability and the number of homes sold in this market. We witnessed a 21.4% drop, with 519 homes sold compared to 630 homes sold during the same period last year. This decline is a direct consequence of the increased prices and interest rates in this market.

There's some positive news, though. We've observed a 14.5% increase in the number of homes actively available on the market, which is a relief considering the previously weak supply. However, we're still below the desired inventory levels for the Huntsville market, but the trend is moving in the right direction.

Another significant story revolves around the Athens market. The average sales price in Athens has now surpassed that of the Huntsville sales market, coming in at $397,000 compared to $391,000 in Huntsville, marking a $6,000 difference.

The number of homes sold in the Athens area did not decline as much as in the Huntsville area. There's only an 8% drop, with 137 home sales compared to 148. This truly reflects the efforts that the city of Athens has invested in terms of both infrastructure and school improvements. Many families are keen on living in a smaller town setting with excellent schools, good infrastructure, and a short commute to the Huntsville area. Athens has capitalized on that over the past year.

In the Morgan County area, there's continued growth as many seek more affordable housing and aim to commute into the Huntsville market. Of course, Morgan County and the Decatur market offer numerous job opportunities as well.

Prices have increased by $4,000 year over year, from $270,000 last year to $274,000 this year. Although there was a decline in sales, with 102 compared to 123, the Morgan County market remains strong. Especially in the Priceville & Hartselle market, there's a noticeable surge in new construction to meet the rising demand for affordable housing in these areas.

New Listings & Months of Supply

In the Huntsville market, we noted a significant increase in the number of homes available. Overall, new listings have remained relatively unchanged. We're looking at 1,243 listings compared to 1,261 this time last year, indicating a decrease of 1.4%.

To be frank, once again, the supply in this marketplace is just not sufficient. We're looking at 3.3 months' worth of supply compared to 2.6 months' worth of supply last year, which is trending in a positive direction. Typically, a balanced market falls between 4 to 6 months. Anything above 6 months is a buyer's market, while anything below 4 months indicates a seller's market. Technically, we're still in a seller's market, even though it doesn't feel like that after experiencing an extreme seller's market with just one month's worth of supply for a prolonged time. We remain in a seller's market but are definitely moving towards a more balanced market. I expect to see that balanced market over the next few months

Pending Sales & Closed Sales

Pending sales have also remained relatively flat year over year. It was around this time last year when we witnessed a substantial drop as interest rates began to rise around August, September, and October. Pending sales stayed level at 893 compared to 877 from this time last year, marking an increase of 1.8%.

Closed sales have declined by 16.1%, dropping below a thousand to 871 from 1,038. Any month where we're selling fewer than a thousand homes in this Huntsville market is certainly considered slower.

Days on Market & Percent of List Price Received

Days on the market continue to increase, moving towards a more typical level. This time last year, we were at only 22 days, which was actually higher than the previous year, where the number was even lower. It was a period of record sales in terms of how quickly homes were selling. Now, the average stands at about 33 days on the market. Ideally, we'd like to see that number closer to 45 or higher for a more balanced market, but we're moving in that direction.

Another positive trend indicating a more balanced market is the percent of list price received on an offer. Presently, we're at 97.8%, while this time last year, it was 98.8%. A balanced market tends to hover around 97%. This allows for a 3% concession, motivating sellers to cover buyers' closing costs. This helps attract first-time buyers who might otherwise struggle to compete in offers and need assistance with closing costs to step into homeownership.

Huntsville, Alabama Housing Affordability

Another significant statistic to focus on in the Huntsville area is the housing affordability index. A quick reminder: a score of 100 on the housing affordability index indicates that the median household income can afford a home within the median price range. Unfortunately, we've been below that 100 mark for over a year now. Last year at this time, we were at 85. Now, the score has dropped further to 80 due to the higher prices and increased interest rates prevailing in this environment. This is a substantial decrease even from 2021 when we had a score of 134. Just a few years ago, we were above 150. 

Huntsville has significantly declined in terms of affordability, which is something the local economy and city will need to address. It's crucial to have affordable housing available for schoolteachers, nurses, police officers, and others, ensuring they don't have to commute too far to reach their jobs here in the Huntsville area.

As interest rates begin to decrease, housing affordability remains low, and prices continue to rise in the Huntsville market. We'll soon unveil our 2024 real estate predictions. Stay tuned over the next couple of weeks as we release insights on what housing affordability, prices, and interest rates will do in the overall Huntsville area market.

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