Monthly report shows prices rising as mortgage rates stabilize

The monthly report for the month of January 2024, as compiled by the Huntsville Area Association of Realtors (HAAR), shows indications that the local real estate market is beginning to shrug off the sluggishness of the end of the year. 

The addition of housing inventory continues apace, with 1738 units on the market in January, up from 1493 in January of last year. There were 919 pending sales in Huntsville-Madison County over the course of the month, while the average sale price began to creep back upwards, at $386K, up from $346K for the same period the previous year. 

“A notable 8.6% surge in pending sales, the most significant since June 2020, suggests a rebound as homebuyers, encouraged by a significant drop in mortgage rates, step back into the arena,” said HAAR CEO Kurtis Kruger. 

For the past year, the market has been largely beholden to rising mortgage rates as the predominant factor for buying and selling habits. However, as the Federal Reserve continues to manage inflation and subsequent interest rates, the price of housing has continued to steadily rise, not only here in Huntsville, but nationally as well.

While mortgage interest rates edged up weekly, the overall trajectory from fall 2023 is down and is now a full percentage point below the recent high” when rates neared 8%, said Jessica Lautz, deputy chief economist at the National Association of REALTORS (NAR). 

“While mortgage interest rates may come down to the low 6% range in the middle to later part of the year, buyers must weigh what makes the most sense for them. Timing the real estate market based purely on mortgage interest rates—especially marginal changes—rarely works when new babies, marriages and jobs are the real decision-makers,” continued Lautz. 

The NAR projects an expected 1.4% increase in the annual median sales price of a single-family unit over the course of 2024.

While the Federal Reserve has held off on actively slashing interest rates to ensure that the managed reduction of inflation returns to schedule, the steadily-rising price means that holding off on buying a home based primarily on the expectation of a falling mortgage rate will have diminishing returns by the middle of the year, and will actively lose money shortly thereafter. 

Inventory remains a persistent issue for the market. The NAR’s national survey for the month of January showed that the sales of existing homes rose 3.1% from December 2022.

Here in Huntsville, the addition of inventory has continued, with the latest weekly report from the HAAR, dating from February 10, indicating an 11.4% increase. 

Huntsville continues to be an attractive city for businesses to operate, and that has reflected in the high demand for housing. With inventory continuing to come online about as quickly as it can be built, 2024 looks as though it will shift into more of a buyer’s market, especially as the average days on market – 40 as per HAAR’s January report – means that buyers will have the time available to better research and negotiate deals. 

As always, the Huntsville Business Journal will continue to monitor the real estate market, both locally and nationally, and report developments as they occur.