Birmingham AL Housing Market Prices and Forecast 2025-2026

Are you thinking about buying or selling a home in Birmingham? Understanding the current Birmingham housing market trends is crucial for making informed decisions. Simply put, while sales are up slightly from last year, inventory is still relatively low, leading to a market where sellers have a slight advantage, although the increasing days on market do signify that things are cooling down and buyers have more power. Let's dive into the details.

Current Birmingham Housing Market Trends:

Home Sales

Let's take a look at how many homes are actually selling in the Birmingham area. Total residential sales in Birmingham for January 2025 were 786 units. That might sound like a lot or a little, so here's some context, according to the ACRE (Alabama Center for Real Estate) report.

• Compared to December 2024: Sales decreased by 25.8% (1,060 units). That's not surprising though as we see a cooling down in sales volume during the winter season.
• Compared to January 2024: Sales increased by 13.3% (694 units).
• Compared to the 5-year average (2020-2024): Sales decreased by 15.4% (930 units).
• Compared to the peak (January 2021): Sales decreased significantly by 33.9% (1,190 units).
• Compared to the trough (January 2024): Sales increased 13.3% (694 units).

This data tells me a few things. First, the typical winter slowdown is in play. Second, while sales are up from a year ago, they are still lower than the pre-pandemic and peak pandemic levels. This suggests a more normalized market, but we're not quite there yet.

Home Prices

Now, let's talk about the big question: How much are homes actually costing in Birmingham right now? The median sales price in Birmingham for January 2025 was $282,000.

• Compared to December 2024: The median sales price decreased by 2.7% ($289,875).
• Compared to January 2024: The median sales price increased slightly by 0.8% ($279,650).
• Compared to the 5-year average (2020-2024): The median sales price increased significantly by 12.4% ($250,860).
• Compared to the peak median sales price (January 2025): The median sales price is at the same peak – $282,000.
• Compared to the trough median sales price (January 2015): The median sales price increased a whopping 81.9% ($155,000).

Average sales prices

The average sales price in Birmingham during January 2025 was $342,328.

• Compared to December 2024: Average sales prices decreased by 0.7% ($344,827).
• Compared to January 2024: Average sales prices increased slightly by 0.3% ($341,286).
• Compared to the 5-year average (2020-2024): Average sales prices increased significantly by 14.7% ($298,521).
• Compared to the peak average sales price (January 2025): The average sales price is at the same peak – $342,328.
• Compared to the trough average sales price (January 2015): The average sales price increased a whopping 79.6% ($190,648).

The numbers tell a clear story: home prices in Birmingham have risen considerably over the past decade. While there was a slight dip compared to last month, the long-term trend is still upward, even if the pace has slowed.

Are Home Prices Dropping?

This is the question on everyone's mind! While there was a slight dip in both the median and average sales prices compared to December, it's too early to say prices are definitively “dropping.” The decrease could simply be due to the typical seasonal slowdown we see in the winter months. I would keep a close eye on the data over the next few months to see if this trend continues. If you see that the data does not pick up, you can conclude that it was seasonal and not a new trend.

Comparison with Current National Median Price

According to recent data, the national median home price is $396,900 (January 2025), with a year-over-year change of +4.8%. The Birmingham median sales price of $282,000 is significantly lower than the national median. This means that Birmingham remains a relatively affordable housing market compared to many other parts of the country. If you're looking for value, Birmingham could be a good option.

Housing Supply

Inventory levels play a HUGE role in determining whether it's a buyer's or seller's market. So, what's the housing supply looking like in Birmingham? Total units listed for sale in January 2025 were 3,306.

• Compared to December 2024: Listings decreased by 33.0% (4,936 units). This decrease in supply is not ideal for buyers as there are fewer options.
• Compared to January 2024: Listings decreased by 12.3% (3,771 units).
• Compared to the 5-year average (2020-2024): Listings increased by 5.7% (3,128 units).
• Compared to the inventory peak (January 2016): Listings decreased significantly by 47.5% (6,297 units).
• Compared to the inventory trough (January 2022): Listings increased dramatically by 149.5% (1,325 units).

The data indicates that while inventory has improved from its historic lows in early 2022, it's still below the peak levels seen in 2016. The decrease in listings compared to last month and last year could indicate that sellers are hesitant to list their homes.

Is It a Buyer's or Seller's Housing Market?

To determine this, we need to look at the inventory-to-sales ratio, which tells us how many months it would take to sell all the homes currently on the market.

The inventory-to-sales ratio in Birmingham for January 2025 was 4.2 months.

• Compared to December 2024: The ratio decreased by 9.7% (4.7 months).
• Compared to January 2024: The ratio decreased by 22.6% (5.4 months).
• Compared to the 5-year average (2020-2024): The ratio increased by 16.3% (3.6 months).
• Compared to the peak ratio (January 2015): The ratio decreased significantly by 49.9% (8.4 months).
• Compared to the trough ratio (January 2022): The ratio increased dramatically by 250.5% (1.2 months).

Generally, a market with 6 months of supply is considered balanced. Anything below that favors sellers, while anything above favors buyers.

Based on the data, Birmingham currently leans towards a seller's market, but it's not as strong as it was a couple of years ago. With a 4.2 months of supply, sellers still have a slight edge, but buyers aren't completely powerless, I would say.

Market Trends

Here's a quick summary of the key trends I'm seeing in the Birmingham housing market right now:

• Sales: Up from last year, but down from peak levels.
• Prices: Still relatively stable, with a slight recent decrease but a longer uptrend.
• Inventory: Improving from historic lows, but still below pre-pandemic levels.
• Market: Leaning towards a seller's market, but becoming more balanced.
• Days on Market (DOM): The average number of days on the market was 50 in January 2025, which is a 25% increase from 40 days a year prior.

Impact of High Mortgage Rates

One of the biggest factors impacting the housing market nationally and in Birmingham is mortgage rates. As of early March 2025, the average 30-year fixed mortgage rate is around 6.5%. While this is significantly lower than the peak rates we saw in late 2023 and early 2024, it's still higher than the rates many homeowners became accustomed to in the years leading up to the pandemic.

Most forecasts predict that mortgage rates will remain at or slightly above this level for the foreseeable future. This has several impacts:

• Reduced Buyer Affordability: Higher rates mean higher monthly payments, making it more difficult for some people to afford a home.
• Slower Price Appreciation: High rates can put downward pressure on home prices, as fewer buyers are able to compete.
• Hesitant Sellers: Some potential sellers may be hesitant to list their homes, as they don't want to give up their lower mortgage rates.
• Increasing Days on Market : Sellers are slowly seeing the data and are not in as much of a hurry to sell.

Birmingham Housing Market Snapshot (January 2025)

To give you a clear overview, here's a table summarizing the key metrics:

Metric	January 2025	Comparison to January 2024
Total Residential Sales	786	Up 13.3%
Median Sales Price	$282,000	Up 0.8%
Average Sales Price	$342,328	Up 0.3%
Total Units Listed for Sale	3,306	Down 12.3%
Inventory-to-Sales Ratio	4.2 months	Down 22.6%
Average Days on Market	50 days	Up 25%

Birmingham Housing Market Forecast: What's Next for Home Prices?

So, what's going to happen with Birmingham housing prices? Experts are not predicting a major crash. Instead, the Birmingham, Alabama, housing market forecast suggests a moderate increase in home values over the next year. Based on the latest data, Zillow predicts a 0.3% increase in Birmingham home values between January 2025 and January 2026.

What the Numbers Say: A Detailed Look

Let's break down the numbers to get a clearer picture of the real estate trend in Birmingham. Here's a summary of Zillow's most recent housing market forecast:

Region	Forecast for Feb 2025	Forecast for Apr 2025	1-Year Forecast (Jan 2025 – Jan 2026)
Birmingham, AL	0.2%	0.5%	0.3%

This table shows that while the growth might be slow initially, there's a steady increase expected within the first few months of 2025, leading to a modest overall rise by January 2026.

How Does Birmingham Stack Up Against Other Alabama Cities?

It's always helpful to see how Birmingham's real estate market compares to other areas in Alabama. Here's a quick comparison:

Region	Forecast for Feb 2025	Forecast for Apr 2025	1-Year Forecast (Jan 2025 – Jan 2026)
Huntsville, AL	0.3%	0.9%	2%
Mobile, AL	0.4%	1%	1.1%
Montgomery, AL	0.3%	0.7%	0.4%
Tuscaloosa, AL	0%	0.1%	-0.7%
Daphne, AL	0.3%	0.9%	1.8%
Auburn, AL	0.4%	1%	1%
Decatur, AL	0.5%	0.8%	1.2%
Florence, AL	0.6%	1.3%	2.3%

As you can see, while some cities like Huntsville and Florence are expected to see stronger growth, Birmingham is still projected to see a positive, albeit smaller, increase in home values. Tuscaloosa is the only metro area in Alabama that is expected to see a decline in property values over the one year period.

Will Home Prices Drop or Crash in Birmingham?

Based on current projections, a housing market crash or significant drop in home prices in Birmingham is unlikely. The Birmingham housing forecast points to a stable, gradually appreciating market. The housing market is influenced by many factors, including interest rates, job growth, and population trends. While these factors can shift, the current outlook suggests a steady course for the Birmingham metro area.

My Thoughts and a Possible 2026 Forecast

Having followed the housing market for years, I believe Birmingham's steady growth is sustainable. It isn't experiencing the explosive growth of other areas in Alabama, but the more modest rate of growth is healthy. If current trends continue, I wouldn't be surprised to see a housing market forecast for 2026 that is similar to the 2025 forecast—a modest increase in values, driven by a steady demand and a balanced supply of homes. However, it is important to keep in mind that housing market forecasts are not always accurate.

Factors Influencing the Birmingham, AL Housing Market

Several factors are shaping the Birmingham, AL housing market, leading to its current state.

1. Economic Growth and Job Market:

• Birmingham has witnessed steady economic growth, fueled by industries like healthcare, manufacturing, and technology.
• The city has a growing job market with diverse sectors, attracting new residents and increasing demand for housing.
• Companies like Protective Life, Regions Financial, and Vulcan Materials are among the leading employers, contributing to the strong job market.

2. Affordable Housing:

• Birmingham offers relatively affordable housing compared to major metropolitan areas, making it an attractive option for homebuyers seeking value for their investment.
• The median home price in Birmingham is significantly lower than national averages, making it a desirable location for families and individuals looking to escape high housing costs in other cities.

3. Infrastructure Development and Amenities:

• Birmingham continues to invest in infrastructure improvements, including transportation systems, parks, and public amenities.
• The city's revitalized downtown area offers a vibrant cultural scene, restaurants, and entertainment options, enhancing its appeal for residents.

4. Lifestyle and Quality of Life:

• Birmingham enjoys a high quality of life with a strong sense of community, diverse cultural offerings, and access to outdoor recreation.
• The city offers a mix of urban and suburban living options, catering to various preferences and lifestyles.

5. Interest Rates:

• The fluctuating interest rates play a significant role in housing market dynamics.
• Higher interest rates can make mortgages more expensive, slowing down homebuyer activity.
• Conversely, lower interest rates can encourage more buyers, increasing demand.

6. Demographics:

• Birmingham's growing population, driven by factors like affordability, employment opportunities, and quality of life, adds to the demand for housing.
• The city's diverse demographic profile reflects a range of housing needs and preferences, shaping the market dynamics.

Investing in the Birmingham, AL Housing Market

The Birmingham, Alabama housing market has been a topic of interest for investors looking for opportunities in real estate. With its rich history and evolving economy, Birmingham presents a unique landscape for potential investment. As we delve into the current state of the market and its prospects, it's important to consider various factors that influence investment decisions.

1. Market Trends and Economic Indicators

Recent analyses suggest that the Birmingham housing market is experiencing a period of stability with minimal fluctuations in home values expected year-to-year. This stability is a positive sign for investors who prefer markets that are not subject to volatile swings. Additionally, Alabama's affordability places it among the top rapidly growing states, which can be an attractive feature for both residential and rental property investments.

The population growth in Alabama, particularly in areas like Huntsville and Baldwin County, indicates a healthy demand for housing. Although Birmingham has seen some population decline in traditional urban centers, it remains the largest metropolitan area in Alabama, suggesting a sustained need for housing.

2. Investment Opportunities

Birmingham's real estate market has been recognized for its strong demand, with properties often being sold within an average of 15 days on the market. This quick turnover can be advantageous for investors looking to flip properties or seeking quick rental occupancy. Moreover, the city's transformation into a hub for medical research, banking, and services, while maintaining its manufacturing roots, provides a diverse economic base that can support a robust housing market.

The city's population is projected to increase, and with a business climate ranked among the best in the nation, Birmingham's job market shows signs of growth, which could lead to increased demand for housing.

3. Considerations for Investors

Before investing, it's crucial to consider the long-term prospects of the market. While current trends are favorable, the future of any housing market is subject to change due to various economic and demographic factors. It's also important to evaluate individual properties and neighborhoods to understand their potential for appreciation and rental income.

Investors should also be aware of the legal and regulatory environment in Birmingham and Alabama as a whole, as these can impact the profitability and management of real estate investments.

Conclusion

The Birmingham, AL housing market presents several attractive features for potential investors, including market stability, population growth, and a strong economic base. However, like any investment, it comes with risks and requires thorough research and consideration of long-term trends. With careful analysis and strategic selection of properties, Birmingham could indeed be a good place to invest in real estate.