Editors note: Chart accompanies release

TUSCALOOSA, Ala. – The sale of existing single-family homes in Alabama declined by 11.1 percent in October to 4,831 units, according to the Alabama Real Estate Research and Education Center at The University of Alabama. Only January and February posted lower sales figures.

Statewide, existing home sales peaked in June at 5,905 units, but have been falling consistently every month since then. The average sales price dropped slightly in October to $153,833, compared with $155,953 last month. The average number of days a house remained on the market was virtually unchanged over the past two months, increasing on average by two days to 125 days in October.

The total number of homes for sale in Alabama set another record in October at 27,449 units, representing a 5.7-month supply of existing homes at the current sales pace. This compares to a 4.98 month inventory of homes in September. The supply of homes has continued to rise since March, setting records in August, September and October.

“Prices and sales are declining while the supply of existing homes is on the rise,” said Dr. Leonard Zumpano, director of the center. “These are obvious signs of a slowing housing market as we approach the end of 2005.”

By any measure, however, 2005 will be a good year for housing and may still surpass 2004, Zumpano said. Statewide year-to-date home sales rose by 9.2 percent from October 2004 to 50,573 units sold in October 2005. The year-to-date average sales price for October is $147,678, representing a 14.4 percent increase from the year-to-date sales price in October of 2004. The year-to-date average number of days a home was on the market was down 10 days from last year to an average of 131 days.

Only three of the 21 areas tracked by AREREC reported an increase in the number of homes sold in October – Dothan, Jackson County, and the Wiregrass.

Zumpano said the year-to-date figures, which are typically better gauges for market trends than the more volatile month-to-month figures, indicate an increase in home sales in 19 of the 21 areas compared to the same time last year. Through the first 10 months of 2005, sales are down only in Baldwin and Marshall counties.

The average sales price figures for the month were almost evenly split, with 10 areas reporting a decrease in average sales price and 11 reporting an increase. Four of the areas posted record-breaking average selling prices in October, including Tuscaloosa and Montgomery.

Alabama residential construction spending increased in October by 1.5 percent to bring the total for the year to $4.4 billion. The Alabama Department of Industrial Relations reported that the Alabama unemployment rate rose in October to 4.5 percent. This increase of half of one percent from September brings the Alabama unemployment rate much closer to the national unemployment rate of 5.0 percent.

The 30-year fixed mortgage rate averaged 6.03 in October, according to the Federal Housing Finance Board. At the end of October, the rate on 30-year fixed mortgages was 6.15 percent, down from a monthly high of almost 6.4 percent. With oil prices moderating and inflation remaining in check, mortgage interest rates should remain attractive through the remainder of the year, Zumpano said. The Consumer Price Index rose by only 0.2 percent in October.

The number of existing homes sold at the national level fell in October to 7.09 million units sold on a seasonally adjusted, annualized rate, according to the National Association of Realtors® (NAR). This represents a 2.7 percent decline from the number of existing homes sold in September and the slowest sales pace in seven months.

The national median sales price for existing homes continued to rise in October to $218,000 from $212,000 in September. The national median sales price for existing homes has risen 16.6 percent since October 2004. Total housing inventory rose in October to 2.87 million existing homes available for sale, representing a 4.9-month supply of homes at the current sales pace.

In contrast to the existing home market, new home sales rose 13.0 percent nationally in October to a record-breaking number of 1.42 million units sold (at a seasonally adjusted, annualized rate). This is the first time new single-family home sales have crossed the 1.4 million mark. The inventory of new single-family homes for sale declined to a very tight 4.3-month supply of homes due to the fast sales pace.

“It may be that the fear of rising mortgage rates caused consumers sitting on the fence to accelerate their purchase plans,” Zumpano said. The national median sales price for new homes rose to $231,300 in October as compared to $215,700 in September.

On the other hand, Zumpano noted, housing starts, an indicator of the future direction of new home sales, declined by 5.6 percent in October to 2.01 million units (seasonally adjusted, annualized).

“Although we are seeing clear signs of a slowing housing market, both in Alabama and nationwide, the market still remains quite strong and may still end the year in record territory,” Zumpano said. “An economy that continues to expand, increased employment, and moderate mortgage interest rates will continue to bolster the housing market and help set the stage for another good year in 2006.”

The Alabama Real Estate Research and Education Center is part of The University of Alabama’s Culverhouse College of Commerce and Business Administration. The UA business school, founded in 1919, has been recognized repeatedly for offering a high-quality, cost-effective education.

Tara Rich, faculty scholar, contributed to this report.

Visit us on the Web at www.arerec.cba.ua.edu