Residential home building activity has consistently increased year-over-year across Alabama for the last three years. In 2018, the sales of newly constructed residential buildings grew six percent compared to 2017.
In general, the new residential home building market in Alabama grew faster than the country as a whole in 2018. The same growth trends for home construction industry have also continued in 2019.
New Residential Construction Inventory on the Rise
In 2018, even though the aggregate number of homes listed for sale in Alabama trended downward (in sync with the national trends), new residential construction inventory continued to grow in the state. As a representative sample, if we take the data for one month (February 2018), it shows that 3,138 new residential construction units were listed for sale in Alabama.
This represented an increase of 1.9 percent from the previous month, and a substantial jump of 20.9 percent compared to the same period from a year ago. During February 2018, as many as 301,000 new home construction units were listed for sale across the US. This represented an increase of 1.4 percent from the previous month and a rise of 16.2 percent compared to the same period from a year ago.
Clearly, Alabama was staying ahead of the national trends in terms of new residential home building. Also, during the same representative month, Alabama’s new home construction market had a supply of 6.2 months, compared to 5.9 months of supply across the US. In terms of pricing, Alabama showed more favorable trends towards the buyers of new homes.
The median sales price for newly constructed homes in 2018 in Alabama was $224,470, which was slightly lower than the prices in 2017. On a national scale, however, the median sales prices witnessed a marginal increase.
Increased Number of New Home Building Permits
Housing starts and building permits are early signs of activity in the new residential home construction market. These trends are also useful in estimating the general economic climate, because the housing market is often one of the first sectors to see a boom or bust when the economy expands or contracts.
New housing permit data reveals that Alabama’s new residential home building market has been growing at a faster pace than the country as a whole. The US Census Bureau considers the beginning of excavation for the foundation or footings of a building as the start of construction activity. On the other hand, the Alabama Center for Real Estate looks at building permit data to determine the project housing starts.
Housing starts and building permits have been growing in Alabama, which is encouraging news for the new residential construction industry as well as the state’s economy going forward.
Estimates for the Foreseeable Future
According to construction industry experts, several market segments for new home building activity are likely to remain robust. Older millennials, for instance, are upgrading in significant numbers from their first homes.
In 2020, they are estimated to make up more than 45 percent of mortgages. For anyone associated with the real estate or construction business, or someone who is looking to buy or sell their home, this is a good time to be in the market.
Alabama has generally seen appreciation in home values in 2019. Average home values during this year grew by 5.9 percent, and they are expected to rise another 3.5 percent in 2020. In the current scenario, residential homes are available on average for three and a half months on the market before they get sold out.
Although the new home building market in Alabama has favored buyers over the last few years, a gradual shift is now taking place. The demand is on the rise and the inventory levels are reducing, which favors the sellers.
At 3.7 percent, the unemployment level in the state is currently below the national average as industries continue to expand. Employment in Alabama has increased year on year in the leisure and hospitality, information, trade, and transportation and utilities sectors.
Consult with a Dedicated Alabama Home Building Law Firm
Davis, Bingham, Hudson & Buckner, P.C. is one of the experienced and reputable construction and real estate law firms serving East Alabama for more than four decades.
Whether you are a contractor or builder seeking professional guidance and support against claims, or an individual homeowner or home buyer in need of legal advice, our attorneys have the knowledge and skills to effectively handle your case. To learn more, call us at (334) 821-1908 or contact us online for a consultation.