2025 Housing Market Update: Nationwide and Alabama Insights

As we reach mid-2025, here’s a look at the housing market’s performance through May. According to the National Association of Realtors, existing single-family home sales are up 0.3% nationwide, reaching a seasonally adjusted annual rate of 3.67 million homes. Sales increased across most regions—including the Northeast, Midwest, and South—while the West saw a 6% decline compared to the same period in 2024.

Persistent challenges remain. High interest rates—hovering in the high 6% to low 7% range—along with exclusionary zoning policies continue to limit housing affordability. Forecasters expect rates to remain steady for the rest of 2025, suggesting the year will mirror 2024 with little change in overall sales activity. The broader housing shortage means affordability will remain a key issue for years ahead.

Alabama Housing Market Snapshot: Existing Homes Sales through May 2025

Alabama’s housing market showed modest growth through the first five months of 2025. Residential sales statewide rose 4.1% year-over-year, with 5,969 homes sold in May. The average sales price increased 3.7% to $325,767. However, homes are taking longer to sell—average days on market rose from 54 to 69 compared to last year.

Inventory grew significantly, with total listings up 14.5% year-over-year, reaching 21,273 homes for sale. The state now has 3.6 months of housing supply, still below a balanced market but up from prior years. Alabama’s housing market remains active but challenged by affordability pressures and longer selling times, as supply slowly rises across most areas.

Alabama New Home Construction Update Through May 2025:  Statewide & Key Markets

In Alabama, new home construction remained steady through the first five months of 2025. The average sales price dipped slightly from $362,000 to $356,000, while total new home sales rose from 3,868 through May of 2024 to 3,925 through May of 2025. Homes stayed on the market longer, with average days on market increasing from 62 to 72. However, months of supply declined from 4.6 to 4.1. New construction continued to represent 16.8% of total home sales, unchanged from the same period last year.

In Birmingham, the average sales price rose from $390K to $432K, while average days on market held steady at 59. Total new home sales dropped 12%, from 490 to 409. Months of supply fell from 6.2 to 3.9, and new construction’s share of total home sales declined from 9.4% to 7.2%.

In Huntsville, new home construction prices held steady, slipping slightly from $399K to $397K through May 2025. Days on market rose sharply from 47 to 71. Sales increased 9.6% year-over-year, while months of supply remained steady at around five months. New construction continued to account for 35% of total home sales.

In Baldwin County, the average new home sales price dipped slightly from $435K to $425K through May 2025. Days on market increased from 60 to 77. Total sales decreased 1%, from 645 to 628. Months of supply declined from 3.6 to 3.2, while new construction’s share of total home sales held steady, slipping from 23.8% to 22.2%.

In Montgomery, the average new home sales price dipped from $385K to $371K through May 2025. Days on market improved, dropping from 107 to 89. Total sales rose 7.6% year-over-year, while months of supply stayed steady around 3.6. New construction’s share of total sales also remained stable, edging up from 16.3% to 16.9%.