Huntsville Housing Market Report | July 2023
The July 2023 Huntsville, AL Housing Report is available, we’ll look at the effects of increased interest rates on average prices, the implications for housing affordability, and shifts in market trends. examine the rise of townhomes and condos driven by the affordability index, explore changes in closed and pending sales, and discuss the enduring seller's market. Additionally, we assess Huntsville's Housing Affordability Index, its recent decline, and the challenges it poses for median income earners. We also highlight Huntsville's recognition as a destination for first-time homebuyers and present insights from Zillow's quarterly survey regarding current real estate sentiment.
Average Home Price in Huntsville, AL
Despite higher interest rates in the Tennessee Valley, average prices have still increased slightly by 0.6%. The average price in our area is now $354,002, up from $351,721 in July 2022. This highlights the market's strength and the limited supply in the Huntsville area. Decatur experienced an even greater surge than Huntsville, with prices rising from $275,000 to $288,000, which I think is just a natural shift to lower-price markets that are still within commuting distance to Redstone Arsenal and other jobs here in the Tennessee Valley. Huntsville's prices have remained relatively steady year over year, going from $391,000 last year to an average of $390,000 in July.
The significant news revolves around townhomes and condos. Thanks to the affordability index, multifamily properties are gaining more attention from builders. At the start of this year, the average price for a townhome or condo was slightly above $245,000; however, it has now surged to over $303,000. This increase is due to higher labor costs and building materials, making the construction of townhomes and condos more expensive compared to several years ago. It's great news that builders are really focusing on this supply for more affordable housing.
Closed Sales & Pending Sales
Closed sales have decreased throughout the Huntsville area and the broader Tennessee Valley region, experiencing a 20.7% decline in units sold in July. Last July saw 1,337 closed sales, whereas this year there were only 1,060. The Huntsville area witnessed an even greater decline of 32%, falling from 802 to 606 closed sales, which aligns with the reduced supply in the Huntsville region. Additionally, given that Huntsville is relatively more expensive compared to some surrounding counties, many buyers seeking affordability are shifting towards markets like Limestone County and Morgan County. Sales have stayed relatively flat for the last several months, ranging from 1,069 in March to 1,060 in July.
Closed sales have seen a year-over-year decrease, while pending sales have remained relatively steady. There were 1,130 pending sales compared to 1,143 last July. I think a lot of that is because last year around this time, interest rates started going up and we saw a dip and Q3 and Q4 but it looks like we're starting to come out of that. Pending sales is looking good in terms of future trajectory, we're probably not going to be down year over year looking ahead to Q3 and Q4.
New Listings, Housing Inventory, Months of Supply
With closed sales down by 20.7%, it's unsurprising to observe a decrease in listings. The number of listings saw a decline of 14.4%, with 1,353 compared to 1,580 a year ago. Notably, this figure is lower than the number of closed sales, which indicates that our inventory is actually starting to get worse once again, which is going to continue to put more and more price pressure on buyers and create even more of a seller's market.
Although new listings have decreased, inventory is actually up. This makes sense because closed sales are down, and the inventory has risen by 12.2%, going from 2,492 last year to 2,796 across the Valley. This isn't really that bad considering how far the number of homes sold has fallen. Huntsville's inventory has surged even more, up by 26.6%. This is understandable due to Huntsville's pricier homes, prompting many buyers to seek more affordable options in Morgan County and Limestone County as the Huntsville affordability index continues to decline due to higher interest rates. Don't be fooled by that high percentage because we still have a seller's market in the Huntsville area. We still do not have enough supply for the demand in the area, and that is reflected in the price in Huntsville as the average price has really not changed over the last year.
Months of supply remains low, it’s at 2.8 months versus two months just a year ago. A quick refresher, a balanced market is considered 4 to 6 months. We are below that four month level at 2.8 months, which means we are technically still in a seller's market. Homes are still selling very quickly, with days on market coming in at 29 days versus 13 days last July. This 29-day figure is one of the shortest days on the market I've seen in my real estate career, sellers are definitely selling their homes quickly in this market.
Huntsville, AL Housing Affordability
The big stat of the day that jumps off the page to me is the Housing Affordability index. The housing affordability index means a score of 100 means the median income can afford the median priced home in our area. A value over 100 implies greater affordability, while a value under 100 indicates reduced affordability for homes.
Huntsville has garnered awards and recognition for several years due to its Housing Affordability Index being above 100. In fact, just two years ago, in 2021, our score was an impressive 147. However, we've now dropped to 85, down from 95 a year ago. This decline is a result of rising prices and interest rates. Unfortunately, this poses challenges for the area, particularly for median income earners such as police officers, nurses, and teachers. When they have to commute from farther away, their engagement in the community they serve diminishes, that's just not good for society. That is one of the negatives that's happening here in the Huntsville market right now.
That being said, Huntsville is still regarded as one of the best places for first-time home buyers. We were recently ranked seventh in the nation. I'm thinking of it as being one of the cleanest dirty shirts in the US. While we're not as affordable as we'd prefer, we are still more affordable than many other comparable cities.
As we wrap things up here, I want to mention that Zillow conducts a quarterly survey of homeowners, inquiring about their plans to sell their homes within the next three years. The latest data from this quarter indicates a peak in seller interest since Zillow started recording this information. They report that 23% of home sellers throughout the US intend to sell their homes within the next three years. Additionally, a recent survey found that 64% of homeowners and sellers believe that the current time is favorable for selling.
Posted by Matt Curtis
If you're thinking about selling your home, contact an agent today.