Huntsville May Real Estate Sales Up But So Is Inventory

Huntsville/North Alabama Area MLS Observations Huntsville, Alabama Residential Real Estate Market May 2010:

Total dollar sales increased a respectable 7% from April to May. May sales were $147,806,531 vs. April $138,323,670. This was 20% higher than last year $122,994,447. This was helped by the expiring tax credit and the strong seasonal spring trend. The twelve month moving average line on the total dollar sales chart shows a more pronounced upward trend.  The sale increase is a better result than we see this month in the Birmingham area, although the inventory situation is worse.

Total unit sales increased from 892 in April to 901 in May, an increase of 9.

New sales decreased from 188 homes last month to 168 this month, a decrease of 20.

Used sales increased from 704 homes last month to 733 this month, an increase of 29 (Sect E  p.3).

The greater increase in total dollar sales over unit sales reflects some increase in activity in the higher priced segments of the market, which also shows in increased average prices.

Used inventory levels remain high. Used homes are 12 months of inventory overall. The inventory situation remains even more challenged in the higher price ranges. Used homes over $200,000 are now at 21 months of inventory, and in $700,000-$800,000 price range over 15 years of inventory. Prices continue to be pressured.

New houses are at 9 months of inventory, and homes priced greater than $500,000 are over a year’s worth of inventory. (E-1).

There seems to be a large number of housing permits issued, given the market conditions. There were 99 new single family housing permits issued (April), down somewhat from 104 in February in Huntsville City, according to the Census Department. This permit level is above the sales level for the comparable area. I have received comments that this might be due to tract builders who do not list in MLS, and indeed that may be a factor, but MLS still accounts for the vast majority of New (and Used) homes sold. The months of inventory calculation removes the issue of MLS vs. non MLS data since it is all based on MLS, and is a ratio of that data. New home inventory remains high.

Total Active listings decreased by 5% this month to 9,122, compared to last months’ 9,587 but 7% greater than last year at this time, 8,550.(Sect A p.4 and Sect E p.3). (This will increase when reported next month.) New houses New listings are 1.9 times the rate of sales (Sect B p.1). Active New listings decreased from 1,649 last month to 1,365 in May, down 284. Sales were only 161 with the rest of the reduction due to expirations, which will come back on the market. (Sect E p.3). Active Used listings decreased from 7,938 last month to 7,757 this month, down 181. This is above last year’s level at this time (6,786) (Sect E p.3).

As this spring begins, the used inventory level is higher than last year. The BRAC realignment will not cure the market, particularly in light of other employment problems. In most price ranges, except the low-end, inventory is building faster than sales. How does construction continue at such a level?

Absorption for New homes was at 9 months of inventory in May. This is better than 12 months last year at this time (Sect E p.8). Absorption for Used homes was 12 months of inventory in May which is even with last month. This is approximately the same as last year’s level at this time (Sect E  p.8).

Average Days on Market for Sold New houses was 167 vs. 192 days last month, with Used at 131 in May compared with 137 in April (Sect A p.18).

Average sales price for Sold New homes was $226,250 vs. $223,766 last month. (Sect A p.2)

Average sales price for Sold Used homes was $149,791 vs. $136,727 last month. (Sect A p.2)

The twelve month moving average line of prices for New homes has a decidedly negative slope, indicating that prices are truly coming down. Used prices seem to have leveled off a bit, which is encouraging. 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.

TWB 6/13/10


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