Alabama’s housing market showed encouraging signs of progress in the second quarter of 2025 as sales picked up, inventory grew, and buyers gained a bit more footing — though the market still hasn’t fully returned to its pre-pandemic rhythm.

You may be curious where things stand halfway through the year or perhaps wondering if the state is experiencing a true rebound or just a seasonal bump typical of spring and summer.

Here’s a closer look at what drove the Q2 gains and what it might signal for the rest of 2025.

​​After a sluggish couple of years, Q2 marked a welcome upswing in market activity. Alabama saw 18,729 home sales in the second quarter — a nearly 8% increase from Q1 and 9% higher than Q2 2024. Sales volume also surged, and active listings jumped 25% year-over-year by June.

"While days on market and inventory have both risen year-over-year, they remain below pre-pandemic levels for the same months,” said AAR economist Evan Moore. “These trends point to a more balanced market, but sales are still trailing behind those of the years prior to 2024.”

Even with more homes changing hands and hitting the market, one trend may seem counterintuitive: homes are taking longer to sell. Average days on market rose from 57 in April to 58 in May and 63 in June. Yet prices are holding strong. The median sales price in June rose to $233,458, up 2% from last year, and the average sales price jumped 14.4% to $277,138.

Mortgage rates remained a key storyline in Q2. The average 30-year fixed rate hovered between 6.7% and 6.85% in June — below 2024 levels, but still enough to give pause to some would-be movers, particularly those holding onto sub-5% rates.

“According to the most current data available, 46.8% of Alabama homeowners have rates below 4%, and 65.6% have rates below 5%,” Moore said. “These homeowners are likely not interested in moving and taking on a higher mortgage rate.”

That “lock-in effect” is still a drag on the market, but recent gains suggest many are choosing to act anyway. More listings, stable rates, and growing familiarity with today’s conditions may be nudging the market into a new normal.

Beyond the housing numbers, Alabama’s economy continues to show strength. In Q1, the state’s real GDP grew by 1% — the third-highest in the country — and personal income grew 6.7%, outpacing the national average. 147,000 new jobs in June is also signaling renewed momentum in the labor market.

“It will be interesting to see whether the state’s income growth and real GDP growth will continue to remain relatively strong and above the national averages as we’ve seen recently,” Moore said. “The state has better housing affordability compared to most of the country, and a stronger economy will benefit the housing market.”

Still, Moore cautions that national inflation trends, potential interest rate adjustments, and overall consumer confidence will remain critical factors to monitor in the second half of the year.

Between market dynamics, mortgage rates, and greater economic factors, who holds the power in today’s market?

“Broadly speaking, the market is currently favoring buyers in Alabama,” Moore said. “However, the median home sales price has continued to increase, which is a positive for sellers.”

Buyers are gaining more flexibility as listings are up, homes are sitting longer, and price growth — while still strong — has cooled. At the same time, sellers continue to benefit from elevated prices and strong consumer demand.

Q2 brought steady progress for Alabama’s housing market. Sales are up, inventory is healthier, and both buyers and sellers are adjusting to evolving conditions. While activity remains below pre-pandemic highs, the market appears to be stabilizing in a way that could signal longer-term balance.