State Real Estate Market Outlook
Realty Market Outlook Alabama State Profile - Spring 2006
Home price appreciation accelerated in 2005
According to the Office of Federal Housing Enterprise Oversight, the house price index for the state rose 9.2 percent in 2005. Median home prices rose by nearly $8,800 last year, which was a record increase and well above the $3,340 average over the last 25 years. Home prices in the Montgomery metropolitan area appreciated most rapidly with an increase of $15,400.
Although home price appreciation accelerated in 2005, housing remains comparatively affordable. According to the National Association of Homebuilders-Wells Fargo Housing opportunity index, just 41 percent of homes nationwide are considered affordable for all U.S. households, nearly 80 percent of homes sold in Birmingham, for example, would be considered affordable for a family earning the median income in the metropolitan area.
The inventory of unsold existing homes is growing.
Growth in Alabama home sales has moderated from its September 2005 peak, while increases in the inventory of unsold homes have continued to build. The total number of homes listed for sale in January 2006 was 16.9 percent higher than a year ago representing a 5.5-month supply, compared to a 5.2-month supply a year ago. The slowing pace of home sales and growing inventory levels suggests that marketing times may lengthen, potentially leading to slower price gains in 2006.
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