Alabama REALTORS® Releases Alabama Economic and Real Estate Report for January 2023
February 21, 2023
FOR IMMEDIATE RELEASE
Contact: Anna Grace Gamble, Director of Communications
Montgomery, Ala. – (February 21, 2023) – The Alabama Association of REALTORS® (AAR) recently launched a statewide market statistics report, the Alabama Economic and Real Estate Report, with plans to publish monthly statewide data on the housing market in Alabama. Today, AAR announced the release of the January 2023 issue.
Alabama’s statewide real estate market continued to slow down in January. Given the continued high inflation and stronger than expected unemployment numbers, the Federal Reserve increased the fed funds rate target by an additional 0.25% at its last meeting. Increases in the fed funds rate puts upward pressure on mortgage rates.
“Average home prices have declined but remain high relative to pre-pandemic levels affecting housing affordability,” said Alabama REALTORS® 2023 President RaJane Johnson. “The combination of higher mortgage rates and higher prices will likely continue to put downward pressure on the number of home sales in the state.”
“The economy is sending mixed signals, which may cause potential home buyers and sellers to sit on the sidelines while waiting to see whether there is a downturn that affects the housing market,” said Jeremy Walker, CEO of the Alabama Association of REALTORS®. “The slowdown in the Alabama housing market is likely to continue in the near term. Historically, sales in February are generally lower and sales activity starts to pick up in the spring each year.”
Here are several key takeaways from the report:
January 2023 Monthly Report:
Alabama had 7,430 home sales in January. This is a decrease of 2,059 sales compared to January of last year.
The median sales price decreased by $3,546 in January compared to a year ago, to $212,708. This is a
decrease of 1.6%.
The sold volume was $1.8 billion in January, a decrease of $0.8 billion from last January.
This is a 30.8% decrease.
The 11,755 active listings at the end of January marks an increase compared to the 7,022 of a
year ago. This is an increase of 67.4%.
The slowdown in the Alabama housing market is likely to continue in the near term. Historically,
sales in February are generally lower and sales activity starts to pick up in the Spring.
Inflation remains high, at 6.4%, with inflation in the South at 6.9% year-over-year. Given the stubbornness of inflation and remarkable job growth numbers in January, it was unsurprising the Federal Reserve increased the fed funds rate target by 0.25% at its last meeting. The effective fed funds rate is 4.58% as of February 16, 2023. The Federal Reserve continued to signal that it will raise the fed funds rate to fight inflation. Increases in the fed funds rate puts upward pressure on mortgage rates.
Average 30-year fixed mortgage rates remained above 6% throughout the month and have done so since mid-September 2022. This is likely to continue through the middle of the year. Additionally, while average home prices declined relative to last month, they remain high, particularly relative to pre-pandemic prices, affecting affordability. For example, the average Alabama home price in January 2020 was $209,419 with an average 30-year fixed rate mortgage of 3.62%, resulting in a monthly payment of $954. In January 2023, with an average price of $239,967 and rate of 6.27%, the average monthly payment is $1,481. The combination of higher mortgage rates and higher prices will likely put downward pressure on the number of sales.
The economy is sending mixed signals, which may cause potential home buyers and sellers to sit on the sidelines while waiting to see whether there is a downturn that affects the housing. Positive signs are consumers continue to spend in the face of inflation and there is substantial job growth, along with low unemployment. However, negative signs include well publicized layoffs and economic indicators are suggesting a downturn. The Conference Board Leading Economic Index decreased in January, marking the 11th straight month with a decline, signaling a potential recession in 2023. Additionally, the ISM Manufacturing Purchasing Managers Index fell to 47.4%, which is the lowest level since May 2020.
The Alabama Economic and Real Estate Report is published monthly and annually by the Alabama Association of REALTORS®. Click here to view the full monthly and annual reports.
About Alabama REALTORS®
The Alabama Association of REALTORS® (AAR) is the largest statewide organization of real estate professionals comprised of over 19,000 members from 23 boards and 1,200 real estate companies. United by adherence to a Code of Ethics, our members work as real estate professionals in the sale, lease, appraisal, management and development of residential, commercial, rural and resort properties throughout Alabama.
The goal of AAR’s Economic and Real Estate Report is to produce timely, data driven economic and market analysis, authoritative business intelligence to serve members, and inform consumers, policymakers and the media in a professional and accessible manner.