Huntsville Housing Market Report | December 2023

Analyzing the housing statistics for Huntsville, Athens, and Morgan County in the North Alabama area during December 2023, this examination explores critical factors influencing the real estate landscape. It covers aspects such as average sales prices, the number of homes sold, and shifts in housing affordability. Additionally, insights into market dynamics, encompassing months worth of supply, housing inventory, and trends in supply and demand, offer a comprehensive overview. Concluding with valuable advice for navigating the evolving real estate scene in 2024, the focus is on anticipated changes in interest rates and their potential impact on housing prices.

Huntsville December 2023 Housing Stats

In the Huntsville market, the average sales price continues to rise, even with the rapid increase in interest rates we've experienced over the last couple of years. The average sales price is up by $16,000, reaching $382,000 compared to $366,000 this time last year in Huntsville.

The number of homes sold did drop in December of 2023 versus 2022 – a 2.6% decrease, with 538 homes sold last year versus 524 homes sold this year. Overall, it's a positive sign that it was only a 2.6% drop because, throughout 2023, we had a significant decline in the volume of homes sold. It's good to see that this is starting to increase a little bit over the previous year.

It's not quite as substantial a drop. Everything is starting to trend in the right direction in terms of home sales for 2024. We also experienced an increase in the number of homes on the market – a 19% rise. Many people who have experienced the mortgage rate lockdown effect are starting to put their homes on the market as interest rates drop. They're eager to move on with their lives, plans, and dreams, putting their homes for sale on the market.

Athens December 2023 Housing Stats

Turning to the Athens market, the average sales price has decreased year over year by $11,000, dropping from $358,000 to $347,000 in December 2023. I believe this decline is primarily attributed to the available inventory on the market and may not necessarily indicate a genuine decrease in prices within the Athens market. It's noteworthy that the average sales price is slightly below that of Huntsville, which is a positive aspect.

Huntsville and Athens were closely aligned for the past several months. I believe there should be a bit of separation to provide more affordability for those willing to commute into the Huntsville market. The Athens market is well-suited for this, offering high-quality homes, a high standard of living, and excellent school districts.

Moreover, there is an increase in the number of homes available in this area, marking a significant 38.5% rise in available homes. This is a positive indication, particularly for the outlying areas, where additional inventory is needed. The Athens market also witnessed more homes being sold – 143 compared to 166 – reflecting a 16% gain. This highlights the growth and thriving nature of this area within the greater North Alabama region.

Morgan County December 2023 Housing Stats

In Morgan County, there was a substantial drop in the average sales price. The average sales price was $301,000, and now it's down to $269,000. This includes areas like Decatur, Hartsville, and Priceville. There were 39.7% more homes sold, 102 versus 73, and a significant increase in the overall homes on the market, a 38.8% rise, as we're witnessing more new construction in those areas as well.

One of the major factors contributing to the price decrease is the abundance of listings in the Decatur market sitting above $200,000. Listings in the $225,000 to $250,000 range are lingering, not selling as quickly as homes below $200,000. Homes at the lower price points in Morgan County are selling rapidly, impacting the overall average sales price in that area.

New Listings, Pending Sales, & Closed Sales

Overall, for all the counties reporting in the North Alabama area, new listings are up by 21.8%, a positive sign. We were at 725 this time last year, and now we're at 883 homes that entered the market in December 2023. The reason this is such a positive sign is that there simply hasn't been enough inventory for all the potential buyers emerging from the sidelines. There's been a 6 million home deficit in this country, so we've needed more inventory.

One of the factors keeping people on the sidelines has been the mortgage rate lockdown effect, where many homeowners have interest rates in the high 2% and low 3%, and they haven't been motivated enough to sell their homes to move to the next one with a lower interest rate. However, as interest rates are starting to fall, we're seeing that loosen up with the increase in inventory. Alongside this, pending sales are up to 748 from 670 this time last year, marking an 11.6% increase. This is a positive trend as we experienced some of the lowest sales in a couple of decades in 2023. The overall number of homes sold was really low in 2023, but it's starting to increase.

Days on Market, Percent List Received, Average Sales Price

Close sales were down slightly by 3.9%, totaling 887 compared to 923 the year before. Close sales refer to your November and October contracts, which makes sense given that October and November were a bit slower for the overall area. Nevertheless, we're starting to trend back up as interest rates are on the decline.

Days on market increased from 22 to 41 days, which is not unfavorable. It's still a very healthy market, although not quite as high as you'd prefer to see in a normal market. The average sales price is still up year over year by 4.8%, from $329,135 this time last year to $334,929 now.

The percent of the list price is also slightly up, 97.8% from 97.7% the year before, staying relatively flat. Ideally, you'd like to see around 97% for a balanced market, which is much healthier than what we experienced before, with multiple offers and all homes going above the list price, reaching north of 100% on that percent of list to price sales ratio.

Housing Affordability

The most significant highlight is housing affordability. Just a quick reminder: a housing affordability index of 100 means the median household income can afford the median price range home. Fortunately, we have fallen below that, below 100, which means many of our police officers, teachers, and nurses are facing challenges in finding affordable houses within close proximity to their workplaces, schools, or hospitals.

This has been a negative aspect for our overall area. We were at 80 the previous month, and now we are up to 90. We jumped from 80 to 90 with the lower interest rates, and that is a huge positive sign for the North Alabama area.

Months Worth of Supply & Housing Inventory

Supply is also up as we've had more listings become available on the marketplace. We're up from 2.6 months to 3.2 months supply overall. Basically, what that means is based on the current rate of sales, all the available homes on the market right now, assuming no new homes come available on the market, would take 3.2 months to sell all that inventory. We're still south of what is considered a normal or balanced market, which is 4 to 6 months worth of supply.

Technically, we're sitting in a seller's market. The interesting thing is when you look across the MLS, there are a lot of price drops, which is not typically what you see in a seller's market. It's a very unusual seller's market where we don't have the normal supply on the seller side. However, many sellers are having to get really aggressive with pricing on their homes because of all the new construction inventory and the incentives being offered. Existing homes have had to focus on being aggressive and competitive with the new construction out there.

Overall inventory is up by 10.6%. Heading in the right direction, we were at 2,898 at this time last year, and now we're up to 3,204 homes.

Matt’s Advice

In 2024, look for interest rates to continue going down. As interest rates are starting to decrease, expect to see more supply on the marketplace as people are willing to sell their homes due to this mortgage rate lockdown, in fact. Anticipate more available homes on the marketplace and more sales in 2020, causing housing affordability to go up closer to the 100 level.

What might start to drive that down a little bit is getting a lower interest rate, causing prices to likely begin rising again in the North Alabama area for 2024 and into 2025.

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