Sales Weak, Construction Rolls on in Huntsville Market May 2009

Huntsville/North Alabama Area MLS Observations Huntsville, Alabama Residential Real Estate Market May 2009:

Huntsville, North Alabama market had another poor sales month in May. This pattern is showing increased weakness in the overall market the sales levels for the last two months are below the 2004 levels. May total dollar sales were $113,925,957, 6%, higher than last month’s $107,821,524, and 32% below last year’s level of $166,533,985 (Section A Page 4).

May Huntsville Overall Sales Dollars

May Huntsville Overall Sales Dollars

Total unit sales increased from 681 in April to 687 in May, an increase of 6.

New sales decreased from 126 homes last month to 121 this month, a decrease of 5.

Used sales decreased from 555 homes last month to 566 this month, a increase of 11 (Sect E Page 3).

May Huntsville Sales by Month

May Huntsville Sales by Month

Unfortunately the slight trend down in absolute numbers of used homes for sale seems to have stalled at a fairly high number. Used homes are 11 months of inventory in all price ranges. The inventory situation remains challenged in the higher price ranges. Used homes over $200,000 are now at over 16 months of inventory, and in some price ranges as much as 4 years of inventory. New houses over $400,000 are over a year’s worth of inventory, and in some price ranges over three years of inventory. (Page E-1). There still remain 1,671 New homes for sale, slightly less than double what would have been normal prior to 2006 (See chart Page C-1). I have noted on the web site what seems to be a large number of housing permits issued, given the market conditions. To examine it a bit of detail: In Huntsville city for New homes, we showed 29 homes sold, 121 new listings (May) and 67 new single family housing permits issued (April), So new listings ran 4x sales and permits 2.3x sales.

Total Active listings decreased by 5% this month at 8,206 compared to last month at 8,669 and 3% less than May 2008, 8,447(against the 32% reduction in sales)(Chart section A page 4 and Page E-3). New houses New listings ran almost 3 times the rate of sales (Section B Page 1).

Active New listings decreased from 1,895 last month to 1,671 this month, down 224 (Page E-3).

Active Used listings decreased from 6,774 last month to 6,535 this month, down 239 (Page E-3).

We believe that there is an increasing amount of “shadow inventory” in both the New and Used market places i.e.; houses held off the market for various reasons, but that really are for sale. This could result in higher new listings and inventories as these properties come to market.

As mentioned above, we provide a link to free census department data on our blog site. It is unusual in any market to see months of supply for New houses exceeding Used supply. Given the high number of homes for sale (over 7,500), the BRAC realignment will not cure the market, particularly in light of other employment problems. I don’t get the continued new construction? What banks are funding construction?

Absorption for New homes deteriorated a bit at 12 months of inventory in May. This is a deterioration of 2 months from last year at this time. See Section E page 8. Absorption for Used homes was 11 months of inventory in May same as last month. This is a deterioration of 3 months from last year’s level at this time see Section E pg 8.

Average Days on Market for Sold New houses was 139 days vs. 130 days last month, with Used at 118 vs. 121 last month. (See Section A Page 18).

Average sales price for Sold New homes was $230,045 vs. $218,264 last month. (Chart Sect A Page 2)

Average sales price for Sold Used homes was $152,103 vs. $144,721 last month. (Chart Sect A Page 2)

The mix of higher and lower priced homes is jumping around quite a bit so it’s hard to read too much into average prices. However it is worth noting that the average price 12 month moving averages are all pointing down.

TWB 6/14/09*All references to last month numbers are revised, to pick up late entries (made after our prior publication date) to the MLS system.


One thought on “Sales Weak, Construction Rolls on in Huntsville Market May 2009

  1. Dean

    I am no expert, but my observation is that there are a lot of higher homes for sale that just sit there for long periods of time, go away, then reappear under a new realtor, etc. Just as you indicated-lots of inventory in the higher price ranges (in proportion to buyers in that range.) Perhaps, one culpret is that $417,000 limit on home loans. Anything higher than that requires higher interest rates/different financing options/jumbo loans. In this environment, not an easy thing to swing.

    I think builders have no other place to build. Huntsville tops a lot of lists of good economic potential. The builders build here, because there is no where else to build-their only other option is not to build at all. The banks financing these are taking a risk, perhaps the only place to put money out there in this economy? I just don’t get it either.


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