Homebuyers have 171.5% more houses to choose from in Madison County than they did a year ago, according to a University of Alabama-Huntsville-Huntsville Area Association of Realtors report.

And those houses are staying on the market three times as long as they did this time last year, according to the report released last week.

“Sales have stabilized from the breakneck pace of the last two years, which encourages more homeowners to list their properties,” HAAR President Chris Hulser said. “And because of the overall increase in home prices across the country in that time, prospective buyers aren’t all jumping in to buy at the same time, as we’ve seen the last few years. Our local inventory is using that time to recover from the pandemic market.”

At the same time, cities and towns across the county are seeing new construction in homes and rentals, Hulser said.

Just last week, Madison issued 35 permits to Landmark Cottage Construction totaling $4.2 million for single family dwellings on 180 Hughes Road, according to Southern Exposure Information. And Davidson Homes was issued 15 permits totaling $3.7 million for home construction in Huntsville, Madison, Hazel Green, Toney and New Market.

According to the report, there were 1,430 available homes in the county at the end of the first quarter in March, compared to 524 in March 2022. New construction increased 200% in that time from 288 to 840.

The highest inventory level remained in the $350,000 and $500,000 price range.

The months of supply for all homes continued to increase, with homes staying on the market 33 days in March, compared to 11 days in March 2022. That was 90% more than the 17.3 days in the previous quarter, the fourth quarter of 2022.

“I think it’s important to note that we still don’t have enough available homes on the market,” realtor Matt Curtis said. “Months of supply is up to 2.9 months, but anything under four months is still considered a seller’s market. Listing inventory has transitioned to unhealthy versus savagely unhealthy.”

Curtis said the number of available homes has increased from historic lows due to higher interest rates.

“With higher prices and higher interest rates, many buyers are now no longer able to afford to purchase a home,” he said. “With fewer buyers, the days on market have increased, which is increasing the number of available homes.”

“We always need more, especially in Huntsville and Madison city limits,” added Hulser. “But there’s no silver bullet or magic wand to make that happen. It takes us all working together, and we are grateful for the tenacious work from our builders association, local governments and other partners in that space.”

Home sales still decreasing

Home sales in the first quarter continued to fall under 2022 levels. A total of 1,486 homes sold during the quarter, a drop of 12.6% from the final quarter of 2022 and a 21.2% drop from the first quarter of 2022, when 1,886 homes sold.

An average of 495 homes were sold a month during the first quarter of this year, compared to 629 in the first quarter of last year. The first quarter average for the last five years is 581.

Curtis said higher interest rates have “priced some buyers out of the market and kept some would-be sellers from selling.”

“The demand is still there, but has artificially been manipulated by the fed,” he said. “As interest rates decrease again, the demand will likely come roaring back.”

According to Freddie Mac weekly data, mortgage rates continue to trend down. The 30-year fixed rate mortgage

averaged 6.32% as of March 30, which was down from the previous week’s 6.42% but still higher than the pre-pandemic level. In addition, the consumer inflation rate was 5% in March which is the lowest since May 2021.

But that rate is still well above the Federal Reserve’s 2% target, the report said.

Sales of homes priced below $650,000 fell by around 23% compared to last year. Sales for homes priced $300,000-$650,000 were higher than the first quarter of 2021 but less than 1Q 2022 levels. Sales of homes priced above $650,000 increased by 16%.

“As new residents move here from places with higher costs of living, they typically purchase homes in higher price points,” Hulser said.

“There were 62 sales (above $650,000) versus 47 the year before, so it’s only a delta of 15 homes sales over the quarter, or five a month, which is only 15 of 1486, or 1% of the market,” Curtis said. “This could be due to relocations from higher priced markets or more cash buyers in this price point.”

Home prices stabilize

The median sales price of the first quarter continued to increase ($329,610) compared to the first quarter of 2022 ($322,218). The difference is not significant, the report said.

The median sales prices for January and February were above the same months in 2022. However, the median sales price of March 2023 ($329,900) is slightly less than that of March 2022 ($333,000).

“The lower demand has matched a decrease in number of new listings,” Curtis said. “With the lack of inventory in the market, the median sales price should continue to hold its value.”

Curtis said homes are more affordable compared to similar counties, but said homes will “likely continue to become less and less affordable” as Madison County continues to grow “unless we’re able to address the lack of multifamily and affordable housing products in the area.”

Scott Turner reports from Huntsville for the Lede.