Mobile County home sales dip as interest rates rise – AL.com

Science & Technology

A house in Gadsden, Ala., appears sold on Friday, Aug. 21, 2020. The COVID-19 pandemic has had many effects on Alabama's real estate market – mostly in a scarcity of homes available on the market.
After two years of frenzied real estate sales, the home market in Mobile is finally cooling off due to rising interest rates, according to a new report from the Alabama Center for Real Estate.
In June of this year, the total number of home sales in Mobile was 509, a decrease of 23.6% from June 2021. The average number of days a home spent on the market in June was 27, a eleven-day increase from last year, another sign that demand in the area has cooled off. As the Federal Reserve raises interest rates to try and cap inflation, home demand has started to cool. The Fed raised interest rates by another 0.75 percentage points last week, after hiking rates by the same amount in June.
As demand decreases because of higher interest rates, the total supply in Mobile has increased. The total number of homes for sale in the area increased by 45.1% when compared to the year before. Inventory began increasing statewide in May, and the trend continued in Mobile in June: inventory increased by 8.9% from May to June.
According to Stuart Norton, assistant director at ACRE, increasing inventory is a good thing. For a balanced real estate market, there should be about four or five homes on the market for every sale, to give buyers options, he says. In Mobile, the inventory-to-sales ratio was 1.6, well below what Norton argues is needed but almost double the ratio from June 2021, which was 0.8 available homes for every sale.
“A balanced market will have four to five months of supply,” Norton said. “That way, consumers can have choices.”
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