Alabama Homes Grow More Affordable in Third Quarter

As reported earlier, the Alabama housing market has seen sales rise throughout the summer, a trend not seen in many areas of the country.

Now, the state is undergoing another unusual patter, this one favoring potential buyers and borrowers.

There was a 3.2-percent decline in the state’s median home price, coupled with a negligible increase in mortgage rates, that made Alabama houses more affordable in the third quarter, university researchers report.

According to the Alabama Real Estate Research and Education Center at the University of Alabama, the median home price in Alabama was $137,212 in the third quarter, down from $141,730 in the previous quarter. The composite mortgage interest rate, meanwhile, inched up modestly in the third quarter to 6.77 percent.

“Because the fall in home prices more than offset the effects of rising [mortgage interest rates], housing affordability rose slightly,” the UA research center states in a new release.

Unfortunately, the statewide trend did not hold true for eight of the 11 Alabama metropolitan areas included in the AREREC research, while affordability also declined slightly in four of the five counties used in the statewide average.

However, the university’s “Housing Affordability Index” - a measure of the ability of a family earning Alabama’s median income to purchase a median-priced house - did improve in Birmingham during the third quarter.

The news on the national level remained sobering during the quarter ended Sept. 30, as similar measures of affordability declined, the university’s AREREC reports.

A household earning the U.S. median income of $57,837 “could just barely qualify” for a mortgage loan to buy a house at the median price of $225,000 during the third quarter, the news release said.

The UA researchers noted that home prices actually fell nationwide during the third quarter, but rising mortgage rates precluded any improvement in affordability during that period.