Alabama’s housing market reached a milestone in May as active listings climbed nearly 25% year-over-year to their highest level since 2020. With almost 20,000 homes on the market, both buyers and sellers are facing new dynamics that reflect a market returning to more balanced, pre-pandemic conditions.

But experts note this isn’t a sudden flood of homes — rather, it’s a normalization of inventory after years of scarcity.

“I see this trend as a return to normalcy,” said David Hughes, economist for the Alabama Association of REALTORS®. “Listings for the month of May were at their highest level since 2020 — the first year of the COVID-19 pandemic — but are still just shy of May 2019 levels.”

As inventory levels shift, here’s what buyers and sellers need to know about how these changes could impact their strategies in today’s evolving market.

Increased Inventory Means More Choice

The nearly 25% year-over-year jump in active listings means there are more homes to choose from — a stark contrast to just a few years ago when extremely limited inventory left many would-be buyers frustrated. With less pressure to make hasty offers, buyers can take time to find a property that truly fits their needs.

First-Time Buyers Face Continued Challenges

Despite greater supply, many — particularly first-time buyers — remain under pressure from high mortgage rates and stubborn inflation. These factors continue to impact affordability, even in a market with more options. 

“Stubborn inflation, higher borrowing costs, and labor and supply shortages in housing due to economic impacts stemming from federal policies related to immigration, imports and student loans continue to stymie consumers,” Hughes said. “In the real estate market, this crunch is most likely to affect would-be first-time home buyers. We might yet continue to see some reticence among this group of consumers who await lower borrowing costs or an economy in which their dollar can be stretched a bit further than current conditions allow.”

Strategic Preparation Boosts Listing Performance

With active listings rising for four consecutive months, sellers face more competition than at any point in the past five years. Yet sales activity also increased in May, matching March’s 2025 high, signaling that opportunities still exist for sellers who prepare thoughtfully and price strategically.

Regional Trends Will Shape Outcomes

Sellers should also consider how local market dynamics may affect their sale prospects. Urban and fast-growing counties like Baldwin, Madison, and Tuscaloosa continue to see strong buyer demand, while more rural or slower-growth areas could experience listings outpacing active buyers, potentially requiring more flexible pricing strategies.

“We continue to see homes selling for higher prices in more urban areas,” Hughes said. “Thus, there tends to be greater competition in these markets, while more rural areas or those experiencing slower growth will see less competition.”

Navigating a Rebalancing Market

As Alabama’s housing market continues to move toward more balanced conditions, both buyers and sellers have opportunities — and challenges — that require careful consideration. Increased inventory means buyers can explore more options and negotiate from a stronger position, while sellers must be strategic to stand out in a market with more competition among listings.