The 2023 Annual Alabama Economic and Real Estate Report released on Monday by the Alabama Association of REALTORS® indicates that the state’s housing market mirrored a nationwide trend of declining sales during a year characterized by the National Association of REALTORS® (NAR) as “the weakest year for existing home sales since 1995 and the biggest annual decline since 2007.”
“Everyone is aware that 2023 was a rough year for real estate across the country,” said Senia Johnson, 2024 President of Alabama REALTORS®. “Alabama, like the rest of the nation, battled severe economic headwinds in its real estate market during the last year, but we remain confident that if current indicators continue moving in the right direction, 2024 will offer some welcome relief.”
According to NAR, home sales nationally dropped to their lowest level since 1995, with all four regions of the country – the West, Midwest, South, and Northeast – experiencing year-over-year sales decreases.
Alabama was no exception, witnessing a substantial 30.5 percent annual decrease in home sales activity in 2023, marking the second consecutive year of declining sales with a total of 76,258 recorded sales.
Economists point to elevated mortgage rates as a primary factor, with average 30-year fixed rates exceeding 6 percent throughout the year and surpassing 7 percent for 17 consecutive weeks. NAR reported that the last time U.S. homes faced such unaffordability was in 1984, when 30-year mortgage rates hovered around 14 percent. This combination of strained affordability for potential buyers and rate lock for existing homeowners resulted in the lowest number of home sales in years.
Despite the challenging market conditions for most of 2023, a positive turn occurred in November, when a decision by the Federal Reserve to maintain the fed funds rate target prompted mortgage rates to decline over the final two months of the year.
“If mortgage rates continue to decline and Alabama maintains its historically strong economy and low unemployment, we will likely see positive trends taking shape in 2024,” said Jeremy Walker, CEO of Alabama REALTORS®. “With 2023 fading in the rearview, we look forward to a more positive future for Alabama’s housing market in 2024.”
The Alabama Economic and Real Estate Report is published monthly and annually by the Alabama Association of REALTORS®. Click here to view the full monthly and annual reports.