For the first time in years, Alabama’s housing market is showing signs of shifting in favor of buyers. After an extended period of low inventory and intense competition, the latest January 2025 Alabama Economic & Real Estate Report from the Alabama Association of REALTORS® (AAR) suggests a more balanced market may be taking shape. With more homes available and rising sales and mortgage rates leveling off, buyers now have greater opportunities — and more negotiating power — than they’ve had in recent memory.

Is this a temporary shift, or the beginning of a lasting trend? And what does it mean for affordability, competition, and buyer confidence as the spring season approaches?

Here’s a closer look at the latest real estate trends shaping the market.

A defining feature of Alabama’s evolving market is the near 30% year-over-year increase in active listings. More available homes means less competition among buyers, easing the frenzied pace that characterized previous years.

According to AAR economist Dr. David Hughes, several factors are encouraging sellers to list their homes.

“We've seen sales prices remain relatively stable, which can be attractive to sellers as they try to maximize their profits,” he said. “Listings really took a dive between 2021 and 2023 when pandemic effects, along with other macro-level happenings such as the war in Ukraine, higher interest rates and more, led sellers to sit on inventory.”

An additional helpful trend: Homes are spending more time on the market, with the average days on market increasing 10% year-over-year. This extended timeline reduces the pressure on buyers to make snap decisions, giving them more room to explore options, negotiate, and make thoughtful choices.

Another strong sign of renewed market activity is January’s increase in home sales — the first rise since August 2024.

While it’s highly probable that seasonal trends are a factor, says Hughes, what this means for the future of the market remains unclear.

“On the one hand, there's a certain degree of pent-up demand for residential housing as buyers have been waiting on conditions to improve,” Hughes said. “On the other hand, there is still a fair amount of uncertainty in the current market, which could lead consumers to continue biding their time before purchasing a home.” 

Still, the rise in sales suggests that buyers who had been hesitant may finally be ready to move forward, especially with more choices available.

Another home-buying dynamic with a waning impact on market dynamics? Interest rates. Interest rates have remained at levels above 6% for 15 of the last 18 months. The longer this continues, the more consumers grow accustomed to these levels and see them more as a norm — rather than a hindrance. 

Despite more homes hitting the market and sales increasing, home prices have not dropped significantly. January’s median sales price remained relatively unchanged month-over-month.

“I think we're likely to see sales prices continue to increase in the short-to-medium term,” Hughes said. “We’ve seen year-over-year price gains for seven of the past eight months, even as inventory levels have grown.”

Alabama’s January market data signals an evolving landscape — one in which buyers have more opportunities, but sellers are still in a position to secure solid deals.

While it’s too soon to declare a full-scale shift to a buyer’s market, conditions are undoubtedly more favorable for buyers than they have been in recent years. As the spring season approaches — a historically high-activity period — time will tell how the market will continue to shift.