Alabama’s residential new construction market continues to expand

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Sales of newly constructed homes in Alabama continued to grow in February. New construction sales increased 22 percent from January and increased 14 percent from February 2017. Statewide*, 507 newly constructed homes were sold in February, up from 416 total sales in January and up from 445 total sales in February 2017. Year-to-date, new construction sales are up 6 percent from 2017.

Alabama’s new construction market grew at a faster pace than the nation’s as a whole during February. Nationwide, new construction sales increased 8.5 percent from January, when approximately 47,000 units were sold. There were approximately 51,000 newly constructed homes sold nationwide during February, showing no change from one year ago.

Although the total number of homes listed for sale both in Alabama and in the nation is trending downward, new construction inventory continues to grow in both Alabama and the United States. During February there were 3,138 new construction units listed for sale in the state, an increase of 1.9 percent from January and an increase of 20.9 percent from February 2017. During February approximately 301,000 new construction units were listed for sale nationwide, an increase of 1.4 percent from January and an increase of 16.2 percent from February 2017. There were 6.2 months of supply in Alabama’s new construction market during February, while there were 5.9 months of supply nationwide.

However, Alabama’s new construction market did go against national trends in one area: pricing. Statewide, the median sales price for new construction was $224,470 during February. The median sales price decreased 1.7 percent from January and decreased 3.5 percent from February 2017. Nationwide, the median sales price was $326,800 during February, representing an increase of 0.6 percent from January and an increase of 9 percent from February 2017.

Building permits and housing starts are early indicators of activity in the new construction market, and they are also helpful when measuring overall economic conditions, as the housing market is one of the first sectors to rise or fall when the economy grows or contracts. Permit data for new housing also show that Alabama’s new construction market is growing at a faster rate than the nation as a whole. Statewide, 1,225 building permits for new construction were issued during February. Permits increased 1.1 percent from January and increased 10.1 percent from February 2017. Nationwide, 92,091 permits were issued, representing a decrease of 4.7 percent from January and an increase of 8.6 percent from February 2017.

According to the U.S. Census Bureau, “start of construction occurs when excavation begins for the footings or foundation of a building.” The Alabama Center for Real Estate uses building permit data to calculate projected housing starts. Statewide, there were 1,219 housing starts during February, a decrease of 2.9 percent from January and an increase of 13 percent from February 2017. Using the same calculation, ACRE projected 95,555 housing starts nationwide during February, a decrease of 0.7 percent from January and an increase of 9.1 percent from February 2017. Building permits and housing starts are growing in Alabama and the United States, and this is encouraging news for economic conditions going forward.

Total New Construction Sales in Select Alabama Markets

February 2018 January 2018 February 2017
Baldwin County 100 73 44
Birmingham Metro 125 89 135
Huntsville Metro 112 110 117
Lee County 36 30 34
Limestone County 46 37 32
Mobile Metro 17 17 17
Montgomery Metro 35 24 29
Tuscaloosa Metro 15 14 16

*ACRE receives new construction sales data from the following counties/areas: Baldwin County, Birmingham Metro Area, Calhoun County, Huntsville Metro Area, Lee County, Mobile Metro Area, Montgomery Metro Area, Tuscaloosa County and the Wiregrass Region. Combined, these counties/areas represent +/- 70 percent of Alabama’s total population.