The 2023 Annual Alabama Economic and Real Estate Report, released on Feb. 5 by the Alabama Association of Realtors, highlights a challenging year for the state's housing market, echoing a nationwide trend of declining sales.

According to the report, the National Association of Realtors (NAR) characterized 2023 as "the weakest year for existing home sales since 1995 and the biggest annual decline since 2007."

Senia Johnson, the 2024 President of Alabama Realtors, acknowledged the struggles.

“Everyone is aware that 2023 was a rough year for real estate across the country,” Johnson said in a news release. “Alabama, like the rest of the nation, battled severe economic headwinds in its real estate market during the last year, but we remain confident that if current indicators continue moving in the right direction, 2024 will offer some welcome relief.”

NAR reported that home sales nationally dropped to their lowest level since 1995, with all regions experiencing year-over-year sales decreases. Alabama mirrored this trend, with a substantial 30.5% annual decrease in home sales activity in 2023, totaling 76,258 recorded sales.

Elevated mortgage rates emerged as a primary factor, with average 30-year fixed rates exceeding 6% throughout the year, surpassing 7% for 17 consecutive weeks. This level of unaffordability for potential buyers combined with a rate lock for existing homeowners resulted in the lowest number of home sales in years.

However, a positive turn occurred in November when a decision by the Federal Reserve to maintain the fed funds rate target prompted mortgage rates to decline over the final two months of the year.

Jeremy Walker, CEO of Alabama Realtors, expressed optimism for 2024.

“If mortgage rates continue to decline and Alabama maintains its historically strong economy and low unemployment, we will likely see positive trends taking shape in 2024,” Walker said. “With 2023 fading in the rearview, we look forward to a more positive future for Alabama’s housing market in 2024.”

According to Baldwin Realtors, Baldwin County also witnessed declining trends in 2023 though not as much as the state average.

"Our annual report for 2023 shows that sales volume decreased by 13.5% and total properties sold decreased by 17.4%," said Kayla Sanders, Marketing & Communication Director with Baldwin Realtors.

According to data provided by Baldwin Realtors, higher mortgage rates, increasing sales price and inflation factors contributed to a cooling down of the housing market in Baldwin County. In 2023, Baldwin Realtors Multiple Listing Service (MLS) reported significant shifts in Baldwin County's real estate landscape. The Average Days on Market (DOM) nearly doubled from the previous year, surging by 78.8%. This increase provided buyers with extended decision-making windows. Moreover, the total sales volume experienced a notable decline, plummeting by over $500 million.

Further analysis of Baldwin County's 2023 housing market data reveals additional concerning trends. New inventory and total properties sold both decreased compared to the previous year. The total number of residential new listings dropped to 9,670 properties in 2023, down from 10,217 in 2022. Additionally, the total properties sold in Baldwin County witnessed a significant decrease, totaling 6,868 properties in 2023—a decline of over 1,400 units from the previous year's figure of 8,312 properties sold.

However, amidst these declines, Baldwin County experienced a positive trajectory in terms of average sales prices. The average sales price of residential properties in the county continued its upward trend, increasing by 4.7% to reach $492,534 in 2023, compared to $470,491 in 2022. This increase in average sales price generated more equity for property owners and investors, offering a silver lining amid the challenging market conditions.

Notable statistics from Baldwin County's 2023 housing market data include:

• Average Days on Market (DOM) nearly doubled from the previous year, increasing by 78.8%, allowing buyers more time to make decisions.
• Total sales volume decreased by over $500 million.
• The total amount of residential new listings dropped from 10,217 in 2022 to 9,670 in 2023.
• 6,868 properties were sold in Baldwin County in 2023, a decrease from the 8,312 properties sold in the previous year.
• The average sales price of residential properties in Baldwin County increased by 4.7% to $492,534 in 2023, up from $470,491 in 2022.

Additionally, residential MLS statistics by area in Baldwin County for 2023 were as follows:

• Central Baldwin: 2,066 properties sold with an average sales price of $333,338.
• Coastal Condos: 1,239 properties sold with an average sales price of $641,024.
• Coastal Homes: 1,236 properties sold with an average sales price of $714,297.
• Eastern Shore: 2,162 properties sold with an average sales price of $464,716.
• North Baldwin: 230 properties sold with an average sales price of $282,037.

To see more deatils on the Baldwin County housing report, visit www.baldwinrealtors.com/page/Market_Trends.