The Alabama housing market has made steady progress during the first half of 2025, leading to an uptick in sales, prices, and inventory, and it’s beginning to resemble conditions seen before the pandemic. Even with some economic hesitations, indicators point to a stabilizing market that is moving towards a new equilibrium.

AlabamaRealtors® plans to release five key forecasts about the future later this year. Understanding these trends is crucial for anyone considering their next real estate move.

Let’s dive into what’s occurred so far, what experts are anticipating next, and how this information can guide smarter real estate decisions in 2025.

Signs of a market return to balance

In June, Alabama experienced 6,724 home sales, which is an 8.2% increase from May and 660 more than last year. The median selling price reached $233,458, marking a 1.4% rise month-over-month and a 2.0% gain compared to 2024.

Sales totaled $1.86 billion, up 9.4% from May and 26.5% from June last year, reflecting renewed confidence in the market.

Inventory has also seen growth, with 20,298 active listings at the end of June, a 22.7% boost from the 16,549 listings available a year earlier. This increase provides buyers with more choices than in past years.

The labor market’s stability further supports demand. Alabama’s unemployment rate has remained steady at 3.3% for eight months, while workforce participation hit 57.9% in April, aiding more homebuyers entering the arena.

5 Market Forecasts – and How They Used

1. Interest rates will continue to be normalized

Mortgage rates have stabilized between 6.5% and 7%, returning to a long-term average following the pandemic’s record-low rates. David Hughes, an economist at AAR, mentions, “I think borrowing costs, now regarded as higher than pre-pandemic, are starting to feel normal again.” He notes that many potential buyers and sellers have been hesitant to jump back in, anticipating a return to a familiar economic pattern. But realistically, waiting indefinitely isn’t feasible.

How to act:

• Buyer: Focus on the current market, rather than longing for past interest rates. Delaying in hopes of a return to 3% rates could lead to missing out on a fitting home or increased prices.
• Seller: Be strategic in pricing. Today’s buyers are adjusting to current rates, but they remain budget-conscious. Homes that are well-staged and fairly priced can still go quickly, yet a traditional market pace seems likely.

2. Political landscapes can drive mixed signals

The political climate has generally been favorable for Alabama’s housing market, but trade disputes might introduce some unpredictability. Hughes observes that “the change in administration has been beneficial for the housing economy, yet we’re still waiting to gauge the market’s response to uncertainty from trade issues.” He adds, “We haven’t yet seen the inflationary impacts that many believe accompany higher tariffs.”

How to act:

• Buyer: Consider securing a mortgage rate or making a purchase before any potential inflation or trade-related costs arise. Increased tariffs could push prices for everything from construction materials to appliances.
• Seller: Stay aware of rising construction costs that could impact competition or consider renovations to differentiate your home. It’s important to remain adaptable as policies change.

3. Seasonal trends are preserved

The Alabama housing market is likely to follow traditional seasonal trends, with increased activity during the warmer months that will taper off as colder weather arrives. Hughes notes that “we usually see a seasonal cycle where prices peak at the start of summer and then generally decline into winter, reflecting seasonal demand drops.”

How to act:

• Buyer: If you’re looking now, be aware that competition may ramp up during peak season, but there’s also more inventory available. As autumn approaches, you may find better negotiation opportunities.
• Seller: Summer typically offers the best pricing due to greater buyer activity. If selling in the fall or winter, consider strong marketing and realistic pricing to attract motivated buyers.

4. Labor market supports demand

Alabama’s unemployment rate is lower than the national average, with increased workforce involvement leading more households to either enter or elevate their presence in the housing market. Additionally, Americans are reducing personal debts, which might benefit consumers, particularly first-time buyers.

How to act:

• Buyer: Use the robust job market to secure pre-approval for mortgages and lock in good financing options. With decreased personal debt, you could see an improvement in your credit score and options.
• Seller: Given ongoing job growth and steady incomes, anticipate continued interest, especially from first-time buyers. A home that’s move-in ready or caters to families can attract particular attention.

5. A lot of listings, but construction uncertainty is looming

Active listings in Alabama have reached their highest level since 2020, providing buyers with more choices and contributing to market stabilization after a period of tight supply. Yet, builder sentiment in the South has dropped to its lowest since 2012, driven by worries over rising costs and cautious buyer demand. Interestingly, the Alabama construction sector is the only major industry reporting job losses, having cut 1,400 positions from March to April.

How to act:

• Buyer: With increasing inventory, now might be a good time to negotiate and compare options. However, don’t take it for granted that supply will keep rising; a slowdown in construction could potentially constrain options in 2026.
• Seller: With competition increasing, finding ways to stand out is vital. Highlight what makes your property unique, whether it’s its condition, upgrades, or location, and collaborate with a Realtor® for a strategic selling strategy.

Conclusion

Rather than extreme cycles, the Alabama housing market indicates a trend towards long-term stability. Increased inventory, strong employment numbers, and rising buyer interest all suggest a more balanced environment.

Yet, evolving policies, slower construction, and affordability challenges persist, making it essential to make informed and proactive decisions as we head into the latter part of 2025.