Huntsville, AL Housing Market Report | October 2024

The housing market across North Alabama continues to adjust, reflecting shifts in pricing, inventory, and buyer behavior. Markets like Huntsville, Athens, and Morgan County are seeing notable differences in sales activity and affordability, with builders offering competitive incentives and buyers benefiting from a broader range of options. While overall inventory has increased, creating more balanced conditions, the dynamics of each market vary significantly. Sellers face new challenges in pricing competitively, while buyers have opportunities to leverage affordability improvements and builder concessions. These trends provide insight into where the market is headed and how current conditions affect both buyers and sellers.

Huntsville, AL Housing Market Overview

First, let's take a look at the Huntsville market. Average sales prices have dropped by $18,000, from $391,000 this time last year to $373,000. Home sales have remained relatively stable, with about a 10% difference—564 homes sold in October compared to 519 last year. Year-to-date, the numbers are nearly flat. There has been a significant increase in the number of homes available, with a 37% rise from 1,882 homes last year to 2,571 homes this year.

Athens, AL Housing Market Overview

Next, let's turn to the Athens market, often considered the star of the area. Limestone County, where Athens is located, is the fastest-growing county in the state. The average sales price in this market has decreased by $17,000, from $397,000 in October 2023 to $380,000 this year.

There has been a significant increase in the number of homes sold, with 190 homes sold this year compared to 137 last year. Inventory has also seen a sharp rise, as builders are focusing on Athens due to the availability of land. New construction has contributed to a 47% increase in homes on the market, from 660 homes last year to 972 this year.

Morgan County Housing Market Overview

Morgan County, which includes the Decatur and Hartselle areas, stands out as the only major market where prices have risen year over year. Buyers are attracted to the affordability, with the average sales price increasing by $7,000, from $270,000 to $277,000. This price is still significantly lower than the summer high of $297,000.

Home sales have grown as well, with 130 homes sold compared to 102 last year. Inventory has expanded similarly to other markets, with a 46% increase—488 homes are available now compared to 335 homes last year.

New Listings, Pending Sales, and Closed Sales

For the overall single-family market, new listings have increased year over year, rising 8.1% from 1,255 to 1,357. This is contributing to the growing inventory on the market, though the biggest factor is that homes are selling more slowly.

Pending sales are up 20.3% compared to last year, with 1,036 pending this year versus 861. Closed sales have also risen, with a 9.9% increase from 880 last year to 976 this year. Year to date, closed sales are up by 301 homes. While the market appears relatively flat, looking back two years reveals a decline of 2,300 homes sold since 2022.

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

Days on market have increased to 47 from 34, aligning with what’s typically considered a more balanced market, which ranges from 45 to 60 days. The average sales price has decreased 2.4%, dropping from $354,836 last year to $346,358 this year. This figure is also down $25,000 from the summer high of $371,865.

The percent of list price received has dipped slightly from 97.9% to 97.6%, which is still within the typical range for a balanced market. These numbers, however, don't tell the full story. Builders are offering hidden concessions such as rate buy-downs or incentives like free appliances, which don’t appear in the official percentage figures.

Housing Affordability

Housing affordability remains a key factor shaping the market. Affordability has declined over the past few years due to rising interest rates and home prices. One way to measure this is the Housing Affordability Index, where a score of 100 indicates that a median household income can afford a median-priced home. Scores above 100 indicate greater affordability, which is critical for professions like teachers, nurses, and police officers to afford homes in the communities where they work.

Last year, the index was at 86, signaling decreased affordability. This year, it has improved to 95, helped by a slight decrease in home prices and interest rates. Despite this improvement, bond prices and 30-year mortgage rates have increased following recent election-related impacts, which may cause the index to dip again in November. Looking ahead, as Federal Reserve rate cuts are anticipated, affordability is expected to improve, potentially pushing the index closer to 100 in 2025.

Housing Supply and Housing Inventory

The market has shifted closer to a balanced supply level. Last year, the housing supply stood at 3.4 months. With homes taking longer to sell, supply has increased to 4.2 months, which falls within the 4- to 6-month range generally considered a balanced market. Sellers, though, may feel like it’s more of a buyer’s market due to the numerous incentives offered by builders in new construction.

Builders are offering attractive incentives, making it more challenging for sellers of existing homes to compete. These sellers are having to price more aggressively to attract buyers in today’s market.

Overall inventory has risen by 27.1%, driven partly by an increase in new listings but mostly by the slower pace of sales. Current inventory is at 4,442 homes, compared to 3,338 homes last year. For buyers, this means significantly more options, with inventory levels returning to pre-pandemic figures similar to those seen around 2019.

October 2024 Housing Report Takeaways

Navigating a Shifting Market: Tips for Buyers and Sellers

The market appears balanced on paper, with 4.2 months of housing supply and the list-to-sales price ratio at 97.6%. A balanced market typically falls between 4 to 6 months of supply and a 97% list-to-sales price ratio. In practice, though, some areas feel more like a buyer’s market due to the incentives builders are offering.

For buyers, this is a great time to take advantage of these incentives, which are influencing resale home prices as well. Average home prices have dropped by about $25,000 since the summer. At the same time, the number of withdrawn or expired listings has increased as many homes sit on the market without selling.

Sellers need to stay competitive to avoid stagnation. Homes that aren’t receiving showings are likely priced too high by several percentage points. If your home is getting showings but no offers, a smaller price adjustment may be enough to secure a sale.

Closed Sales Down from 2022 but Market Activity Holds Steady

Closed sales in the Huntsville and Tennessee Valley areas remain virtually unchanged year over year, with an increase of just 300 homes. However, the market is down by approximately 2,300 homes sold compared to 2022.

Nationally, the housing market is expected to close out the year with 3.89 million homes sold, marking one of the slowest years in recent history. The typical annual average is closer to 5 million homes sold, with pandemic years pushing beyond 6 million. This year’s slower activity underscores the broader market slowdown.

Decatur Stands Out with Rising Home Prices Amid Affordability Challenges

Decatur is the only local market where average sales prices have increased, driven by buyers seeking affordability. The Housing Affordability Index for the region is slightly below the ideal level, currently at 95.

Market trends vary widely by area, price point, and school district. If you’re selling, it’s important to understand how your specific market is performing. If you’re buying, now is a good time to explore the available builder incentives.

The Matt Curtis Real Estate team has been the number-one real estate team in Alabama for the past five years. Whether you're buying or selling, our team is here to guide you through every step of the process.

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