A Market in Motion: Q2 Brings New Energy to Alabama’s Housing Market
By: Alabama Economic and Real Estate Report by the Alabama Association of REALTORS®
Alabama’s housing market showed encouraging signs of progress in the second quarter of 2025 as sales picked up, inventory grew, and buyers gained a bit more footing — though the market still hasn’t fully returned to its pre-pandemic rhythm.
You may be curious where things stand halfway through the year or perhaps wondering if the state is experiencing a true rebound or just a seasonal bump typical of spring and summer.
Here’s a closer look at what drove the Q2 gains and what it might signal for the rest of 2025.
Sales Activity is Climbing — But Not Yet Soaring
After a sluggish couple of years, Q2 marked a welcome upswing in market activity. Alabama saw 18,729 home sales in the second quarter — a nearly 8% increase from Q1 and 9% higher than Q2 2024. Sales volume also surged, and active listings jumped 25% year-over-year by June.
“While days on market and inventory have both risen year-over-year, they remain below pre-pandemic levels for the same months,” said AAR economist Evan Moore. “These trends point to a more balanced market, but sales are still trailing behind those of the years prior to 2024.”
Even with more homes changing hands and hitting the market, one trend may seem counterintuitive: homes are taking longer to sell. Average days on market rose from 57 in April to 58 in May and 63 in June. Yet prices are holding strong. The median sales price in June rose to $233,458, up 2% from last year, and the average sales price jumped 14.4% to $277,138.
Mortgage Rates Still Matter — But Mindsets Are Shifting
Mortgage rates remained a key storyline in Q2. The average 30-year fixed rate hovered between 6.7% and 6.85% in June — below 2024 levels, but still enough to give pause to some would-be movers, particularly those holding onto sub-5% rates.
“According to the most current data available, 46.8% of Alabama homeowners have rates below 4%, and 65.6% have rates below 5%,” Moore said. “These homeowners are likely not interested in moving and taking on a higher mortgage rate.”
That “lock-in effect” is still a drag on the market, but recent gains suggest many are choosing to act anyway. More listings, stable rates, and growing familiarity with today’s conditions may be nudging the market into a new normal.
