Alabama’s housing market entered 2026 with a familiar seasonal slowdown — but beneath the surface, the data tells a more nuanced story.

While January sales activity cooled, home values continued to post strong year-over-year gains and inventory expanded. Together, those trends suggest the market may be recalibrating toward greater balance just ahead of the critical spring buying season.

Alabama recorded 4,761 home sales in January, a 15% decline from December and 9.5% fewer than one year ago. While the dip may appear concerning at first glance, it aligns with traditional post-holiday, cooler weather market trends. Seasonal moderation is typical, and this year’s slowdown appears consistent with long-term patterns rather than signaling weakening demand.

Despite fewer transactions, home values remain a clear indicator of market resilience. The statewide median sales price reached $244,520 in January, up 17.3% compared to the same time last year. Even month over month, the median price dipped only slightly (0.4%) from December, underscoring sustained pricing strength.

Average sales prices tell a similar story, rising 16.8% year over year to $281,485.

Total sales volume reached $1.34 billion — a 5.5% increase from January 2025. Although volume fell from December, buyers are still purchasing homes at higher price points than they were a year ago. That means buyers are still actively engaging in the market, and homes are commanding higher prices overall. For sellers, this signals continued pricing power heading into spring.

Active listings totaled 19,073 at the end of January, a 7.5% increase from one year ago and just 3.7% lower than December. Months of supply rose to 5.3 months, up from 4.4 months last January. Many economists consider five to six months of supply indicative of a relatively balanced market.

Homes are still moving efficiently. Properties spent an average of 81 days on the market in January, three days longer than December but three days fewer than January 2025. The year-over-year decline in days on market indicates that well-priced homes continue to attract buyers despite broader economic uncertainties.

It also offers more options and slightly less urgency for buyers — something they haven’t had in recent years.

Alabama’s unemployment rate stood at 2.7% in December, marking the fourth consecutive month below 3%. That figure remains significantly below the national unemployment rate of 4.3%, and reflects ongoing labor market stability.

Mortgage rates have also shown signs of stabilization. The average 30-year fixed rate hovered just above 6% through January, notably lower than this time last year. Additionally, federal policymakers have signaled plans to ease certain banking regulations to increase competition in mortgage lending, which could place downward pressure on rates as the year progresses. 

January’s data points to a housing market that is recalibrating rather than retreating. Strong price growth reflects continued demand and economic health. Expanding inventory and rising months of supply suggest improving balance. Homes are still moving efficiently. And employment conditions remain favorable.

As Alabama heads into its busy spring season, both buyers and sellers may find a more balanced environment than in recent years. Sellers still benefit from elevated home values, while buyers gain breathing room from expanded inventory and stabilizing mortgage rates.