Home buyers and sellers in Alabama may have a happy new year to look forward to, based on a few recent developments.

The Federal Reserve on Wednesday lowered its key interest rate by a quarter percentage point, but indicated the rate of future cuts may be slower in 2025.

The cut comes as the most recent figures on home sales, including in parts of the state considered among the most attractive for homebuyers in the country, showed growing signs of life.

According to the Alabama Association of Realtors, Alabama recorded 5,168 home sales in November. That was a 5.9% increase over the previous month and stopped a three-month slide.

Association CEO Jeremy Walker said the pace of sales may have picked up following the election.

“In October, things were extremely slow,” he said. “Our economists believe people were waiting on the sidelines to see what would happen.”

Sales still remained 2.5% behind the same period in 2023.

The November report reflects a period when the 30-year fixed-rate mortgage was at its lowest level in seven weeks, and 35 basis points below the 6.95% of a year ago.

An interest rate that remains in the low sixes, Walker said, may encourage homeowners to think about upgrades. One of the factors keeping people from doing so is rate lock. According to the latest figures, about 70% of existing mortgage holders in Alabama have a rate below 5%.

Homeowners who have been staying in their existing mortgages to keep the lower interest rates may finally be ready to start looking again, he said.

The median sales price across Alabama increased in November by $6,093, to $221,111, representing a 0.4% increase month-over-month when compared to October. It’s also a 2.8% rise from the median price of a year ago, $215,018.

“That’s great for people in a home, as their value is holding steady and continuing to increase,” Walker said.

The figure marks the sixth straight month of year-over-year increases and indicates strong home values for sellers. Even when facing average 30-year mortgage rates above 6%, the median sales price has increased year-over-year for the last six months in Alabama. The association believes that there is “continued strength in the housing market and that price appreciation will likely continue,” according to the Realtors’ association’s monthly report.

Inventory, which has been an issue since before the pandemic, is showing positive signs too. In fact, the number of listings remains near its highest level in years, according to the report.

For example, according to the University of Alabama’s Center for Real Estate, residential supply is up:

• 62% over last year in the Huntsville metro area,
• 24% in Birmingham,
• 27% in Montgomery and
• 25% in Mobile.

And new home building permits statewide are up more than 10% over last year through November.

“If you look back at 2019,” Walker said. “We were at around three months’ supply. Right now, we’re at five months.”

Active listings remain near five-year highs, meaning more choices for people out there looking.

Home foreclosures were also down sharply, 22.2% from a year ago, and 3.7% from last month.

Recent figures show more people are moving to Alabama. The National Association of Realtors this month released its 2024 Migration Trends Report, which ranked Alabama eighth in the nation for inbound moves, drawing families, retirees and professionals.

“That is great news,” Walker said. “People are continuing to hear about Alabama and wanting to come because of its higher quality of life, low taxes and economic opportunity.”