The Alabama housing market has been steadily recovering throughout the first half of 2025. This recovery has resulted in increased sales, rising prices, and a boost in inventory, signaling a return to conditions that resemble those before the pandemic. Even amidst economic uncertainty, the indicators show a stable market that is inching towards new norms.

This year, AlabamaRealtors® plans to unveil five significant forecasts for the future later this year. Understanding these emerging trends can be crucial for those looking to make their next real estate move.

Let’s explore what’s transpired so far, what experts are forecasting next, and how this information can help you make more insightful real estate decisions in 2025.

Indications of a balanced market

In June, Alabama recorded a total of 6,724 home sales, marking an increase of 8.2% from May and 660 more sales compared to last year. The median selling price rose to $233,458, which is a 1.4% increase from May and a 2.0% uptick from the previous year.

Home sales reached $1.86 billion, reflecting a growth of 9.4% from May and 26.5% from June of the prior year, indicating a resurgence in market strength and buyer confidence.

Inventory also increased, with 20,298 active listings at the end of June—up 22.7% from 16,549 a year ago. This expanded selection offers buyers more options than they’ve seen in years.

The stability of the job market bolsters demand further. Alabama’s unemployment rate has remained steady at 3.3% for the eighth month in a row, and workforce participation reached 57.9% in April, which supports more potential home buyers stepping into the market.

Five Market Forecasts and How to Use Them

1. Normalizing interest rates

Mortgage rates are stabilizing in the 6.5-7% range, moving closer to long-term averages following the very low rates during the pandemic. AAR economist David Hughes notes, “I think borrowing costs are starting to feel ordinary again.” After the pandemic, many buyers and sellers held back, waiting for a return to the so-called “norm.” Yet, it seems that some aspects may have shifted permanently. Individuals can’t remain on the sidelines indefinitely when it comes to the housing market.

How to act:

• Buyer: Focus on what’s available now rather than waiting for lower rates. Missing out on a suitable home could mean losing ground in today’s competitive market.
• Seller: Price with strategy. Even though buyers are adapting to current rates, they remain budget-conscious. Homes that are staged well and priced appropriately are likely to sell quicker, but an overall return to a more typical pace of sales is expected.

2. Mixed signals from the political landscape

The political climate currently favors growth in Alabama’s housing market, but trade disputes and tariffs might introduce some instability. Hughes points out, “I think the change in the presidential administration has positively impacted the housing economy, but uncertainty from trade disputes remains.” He also notes that the inflationary impacts anticipated from higher tariffs have not yet manifested.

How to act:

• Buyer: Think about securing a rate or making a purchase before inflation or costs from trade conflicts escalate. Higher tariffs can increase prices on everything from building materials to appliances.
• Seller: Be mindful of rising construction costs that could influence competition, and consider making improvements to your home before listing. Stay adaptable as policies change.

3. Expect seasonal trends

The Alabama housing market is likely to adhere to traditional seasonal patterns, with heightened activity during warmer months before a slowdown in the cold season. Hughes notes a typical seasonal cycling in prices, with peaks occurring in early summer followed by less demand during the winter months.

How to act:

• Buyer: If you’re in the market now, you might encounter more competition, but also a broader selection. As autumn sets in, potential negotiation opportunities could arise.
• Seller: Summer presents the best opportunity to attract buyers. If you plan to sell in the fall or winter, focus on strong marketing and realistic pricing to catch the attention of motivated buyers.

4. Labor market bolsters demand

Alabama’s unemployment rate is currently lower than the national average, and rising workforce participation is bringing more households into the housing market. Many Americans are also decreasing personal debt, which can be beneficial for consumers, especially those buying for the first time.

How to act:

• Buyer: Leverage the strong job market to get pre-approved for mortgages and secure competitive financing. Lowering personal debt can help improve your credit score and expand your housing options.
• Seller: With continued interest driven by job growth, expect ongoing demand, particularly from first-time buyers. Homes ready for occupancy and appealing to working families can be particularly sought after.

5. Increased listings, but construction uncertainty ahead

Alabama’s active listings have reached the highest level since 2020, granting buyers more options and assisting in stabilizing the market after years of tight supply. However, builder sentiment in the South has tumbled to its lowest since 2012 due to concerns over high costs and cautious demand. The construction sector in Alabama is the only major industry to experience job losses from March to April, shedding 1,400 jobs.

How to act:

• Buyer: With inventory on the rise, now might be a good time to shop around and negotiate. However, don’t assume that supply will continue to increase, as a construction slowdown could impact availability in the coming years.
• Seller: With more homes on the market, it’s important for yours to stand out. Highlight your home’s unique features, whether that’s condition, upgrades, or location, and collaborate with a Realtor® to strategize effectively.

Conclusion

The Alabama housing market is showing signs of long-term stability rather than erratic booms or busts. With higher inventory, robust employment figures, and increased buyer activity, the outlook seems healthier.

That said, ongoing policy changes, slower construction, and affordability challenges are still factors at play. Therefore, making informed and decisive choices will be crucial for navigating the rest of 2025 confidently.