Tax Credit Expiration Hits Huntsville/North Alabama Residential Sales Hard

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

Dollar sales collapsed 36% from June to July. Presumably this is due to the termination of the homebuyers tax credit. July sales were $113,616,394 vs. June $177,554,129. This was 28% below last year $157,823,792. This is a major reversal of the prior four months sales increases. The twelve month moving average line on the total dollar sales chart once again has an ugly downward hook at the end.  The sales collapse was not quite as bad as what we see this month in the Birmingham area, although the inventory situation in Huntsville is a bit worse.

Total unit sales decreased from 961 in June to 635 in July, a decrease of 326.

New sales decreased from 258 homes last month to 109 this month, a decrease of 149.

Used sales decreased from 703 homes last month to 526 this month, a decrease of 177 (Sect E  p.3).

Used inventory levels remain high. Used homes are 13 months of inventory overall. The inventory situation remains even more challenged in the higher price ranges. Used homes over $100,000 are now over a year of inventory, and in $700,000-$800,000 price range over 10 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 two year’s worth of inventory. (E-1).

There seems to be a large number of housing permits issued, given the market conditions. There were 130 new single family housing permits issued (June), up considerably from 68 in May in Huntsville City, according to the Census Department. This permit level is way above the sales level for the comparable area. New home inventory remains high.

In June there was a new all-time record of 8,385 Active Used listings. Total Active listings decreased by 6% this month to 9,381, compared to last months’ 9,975 but 9% greater than last year at this time, 8,598.(Sect A p.4 and Sect E p.3). (This will increase when reported next month.) New houses New listings are once again well over 2 times the rate of sales, which combined with the high number of building permits does not look encouraging. (Sect B p.1). Active New listings decreased from 1,590 last month to 1,381 in July, down 209. (Sect E p.3). Active Used listings decreased from 8,385 last month to 8,000 this month, down 385. This is above last year’s level at this time (6,934) (Sect E p.3).

Absorption for New homes was at 9 months of inventory in July. This is better than 12 months last year at this time (Sect E p.8). Absorption for Used homes was 13 months of inventory in July which is even with last month. This is slightly worse than last year’s level of 12 months (Sect E  p.8).

Average Days on Market for Sold New houses was 164 vs. 145 days last month, with Used at 139 in July compared with 145 in June (Sect A p.18).

Average sales price for Sold New homes was $239,313 vs. $241,714 last month. (Sect A p.2)

Average sales price for Sold Used homes was $166,409 vs. $163,858 last month. (Sect A p.2)

Until we see some signs of normalcy return in the wake of the tax incentive expiration it is very hard to see much into the future. 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 8/07/10


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