Sales: According to the Montgomery Area Association of Realtors’ Multiple Listing Service, Montgomery-area residential sales totaled 353 units during November, an increase in sales of 16.5 percent from November 2016’s total of 303 units. Additional resources to review are the Quarterly Report and the Annual Report.
Forecast: Closed transactions during October were 56 units or 18.9 percent above the Alabama Center for Real Estate’s monthly forecast. ACRE’s year-to-date sales forecast through October projected 3,805 closed transactions, while the actual sales were 4,056 units.
Supply: The Montgomery area housing inventory in November was 2,133 units, a decrease of 6.4 percent from November 2016 and 37.8 percent below the month-of-November peak in 2007 (3,432 units).
There were 6 months of housing supply during November, a decrease of 19.7 percent from the same time in 2016. About 6 months of supply is considered a balanced market, with buyer and seller having equal bargaining power.
November inventory in the Montgomery area decreased 7.5 percent from the prior month. This direction is consistent with historical data indicating October inventory on average (2012-2016) decreases from October by 6.2 percent.
Demand: November residential sales decreased 1.9 percent from the prior month.
Pricing: The Montgomery-area median sales price in November was $143,500, up 2.6 percent from November 2016 ($139,900). The median sales price decreased 4 percent from the prior month. Historical data (2012-2016) indicate the November median sales price typically decreases from October by 1.7 percent. Pricing can fluctuate from month to month as the sample size of data (closed transactions) is subject to seasonal buying patterns. ACRE recommends contacting a local real estate professional for additional market pricing information.
Industry perspective: “The economy and real estate markets continue to show they are resilient. Regardless of the economic metric — GDP, monthly jobs or home prices — the dashboard registers an ‘all-systems-go’ economy,” said KC Conway, director of research and corporate engagement at the Alabama Center for Real Estate. “GDP started the year off with its best Q1 reading in several years and followed it up with above 3 percent readings for Q2 and Q3. (This year) will be the first year since the financial crisis that the economy registered an annual GDP greater than 2 percent. It was just plus 1.6 percent for 2016.
“Job growth is healthy as well. The first week of December the market received solid monthly jobs reports from both ADP (which measures private industry job formation) and the BLS (the government’s monthly jobs report produced by the Bureau of Labor Statistics). ADP reported a healthy new 190,000 private-sector jobs for November and a monthly average of 210,000 jobs over the prior 12 months. The BLS reported November jobs at a higher-than-expected level of 228,000 jobs – and its year-to-date monthly average is 174,000. Unemployment remains low at 4.1 percent, and inflation was just reported on December 13th at 1.7 percent for the “core rate” (which excludes the more volatile food and energy components) and 2.2 percent overall annualized due to higher energy prices.
“The Federal Reserve is taking note of the expanding economy and followed up its prior two rate hikes earlier in 2017 with a 0.25 percent rate increase at its December 13th meeting. Housing conditions remain conducive to growth in new supply and more transaction activity. Single-family home inventories are below demand levels across the nation, Southeast and most Alabama markets. The national rate of appreciation is running above 6 percent on the heels of 5-plus percent in 2016. This is leading builders and lenders to be more receptive to adding inventory. New housing starts and permits will likely end 2017 at or above the 1.3 million units level, split 30 percent multifamily and 70 percent single-family. The outlook heading into 2018 is the best we have seen in a decade.”