The national real estate market continues to struggle to meet consumer demand for housing, with the National Association of Home Builders reporting a six-point drop in new home construction sentiment from July to August. As a result, the national squeeze on housing inventory continues.

Investor purchases – purchases by a business or institution – of housing plummeted for Q2 2023, with national firm Redfin reporting a year-over-year loss of 45%. The combination of the inventory squeeze, high interest rates, and high prices sustained by the growing Millennial demand for housing make real estate speculation less attractive a prospect than in the frenzied days of the pandemic.

Nationally, housing affordability is the worst it’s been since 1984, with real estate agency Black Knight reporting that the monthly payment on a median-priced home in the U.S. costs about 38% of the median monthly income.

These conditions have also served to deter international real estate purchases.

The National Association of Realtors (NAR) reports that, in the year spanning from April 2022 through March 2023, foreign purchases decreased by 14.3%. This marks the lowest amount of sales made by foreign buyers since the NAR began recording in 2009. That same report shows that the median price of an existing home purchased by an international buyer hit $396,400, the highest recorded by the NAR.

Here in the Huntsville/Madison County market, the average price remains below the national average of $412,300, with July’s average price recorded at $311,980.

The inventory of available homes in Madison County continues to rise, increasing a further 8.5% in the week of August 19. However, new listings of single-family homes decreased by 14.8%, and pending sales declined by a similar 13.2%.

While sales remain tepid over the summer, demand still remains strong enough for Huntsville to be an attractive investment for developers. IMS Development’s acquisition of 130 acres of land for its North Valley development project is expected to add 800 new homes to northern Huntsville, a move which will alleviate some of the demand as more and more people move to the city to live and work.

In this way, Huntsville has been largely insulated from the worst effects of the market downturn, faring far better than many other municipalities across the country. The question is, for how long can such a state of affairs last?

The Huntsville Business Journal will continue to report on real estate conditions as they develop.