Learn more about the housing market in Alabama

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

Key Takeaways

1. Alabama’s housing market is stabilizing heading into 2026, with higher inventory, rising listings, and moderating price growth in many metros.
2. Real estate, rental, and leasing remain a major economic contributor, ranking as Alabama’s second-largest GDP sector in 2025 with 3.3% growth.
3. Mortgage rates are still elevated but lower than 2023 peaks, keeping affordability tight and contributing to continued “rate-lock” effects among homeowners.
4. Market conditions vary by metro, with Huntsville remaining competitive while Birmingham and Montgomery show slower price growth and improving supply.

Alabama Housing Market Overview 

As a Deep South state, Alabama is known for its diverse geography, Southern culture, and warm southern climate. Some of the largest Alabama cities by population include Huntsville, Montgomery, Birmingham, and Mobile, and the state is home to several successful industries including Manufacturing and hospitals, its largest by revenue in 2025 according to data from IBISWorld. 

Alabama’s market has indeed been improving throughout 2025 compared to previoys years. In fact, real estate, rental, and leasing represented the second highest sector contributing to Alabama's GDP in 2025, behind only manufacturing, and it had a growth of 3.3% heading into 2026.

Recent gains in Alabama’s housing market reflect stronger inventory and rising sales activity. According to Redfin’s November 2025 housing data, active listings in Alabama increased year-over-year, and the total number of homes for sale was notably higher than in prior seasons, helping ease some supply constraints. At the same time, median sale prices have moderated, with some markets seeing flat or slightly lower year-over-year figures, improving affordability relative to earlier peaks.

Despite these improvements, the Alabama housing market still faces affordability challenges tied to elevated borrowing costs. Mortgage rates have fallen from 2023 highs but remain above historical norms, and many homeowners report feeling “rate locked,” reluctant to sell and take on a new mortgage with similar or higher costs. Alabama buyers and sellers continue to watch broader economic factors such as inflation, interest rates, and job growth, as these will influence market conditions through 2026.

Alabama Housing Market Trends 

To understand the Alabama real estate market, it’s important to keep up with trends. Let’s look at some key ones in Alabama: 

Note: These statistics are based on Redfin’s monthly housing data from November 2025.  

Median Home Price 

Alabama’s median sale price in November 2025 was $292,300, according to Redfin’s monthly housing market data. This is an increase of about 4.9% from November 2024. Median prices in Alabama’s major cities are slightly lower, with Birmingham at $162,000, Montgomery at $190,000. However, Huntsville sits above the national average at $340,000.

Number of Homes Sold in November 2025

4,173 homes were sold in Alabama in November 2025, an increase of about 4.9% from last year. This metric gives us a good picture of the current sales volume in Alabama. However, keep in mind that this number might be lower compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer's market as sales are slower and sellers have less leverage. 

The current median days on market (DOM) in Alabama as of November 2025 is 68 days. This means that listed homes in Alabama spend two months on the market on average. 

New Supply Statistics 

In recent years, Alabama’s residential construction activity has shown ongoing permit issuance, with data from the U.S. Census Bureau’s Building Permits Survey indicating well over 1,300 new private housing units authorized monthly in 2025. This sustained level of permitting reflects continued construction momentum in the state and contributes to expanding housing supply.

Property Tax Rate 

The average property tax rate in Alabama according to Rocket Mortgage is 0.40%. This places Alabama’s average property tax rate as the second lowest in the U.S, with an average annual property tax of only $803.59. However, keep in mind that property taxes vary widely depending on the specific county of Alabama and the value of the home. 

Foreclosure Rate in October of 2025

In October 2025, about 1 in every 6,416 housing units in Alabama received a foreclosure filing, with 361 total filings statewide, according to ATTOM. Alabama ranked 35th nationally for foreclosure activity, with filings down 34% from the prior month and 16.24% lower year-over-year, indicating moderating distress levels compared with earlier in the year.

Hottest Local Markets in Alabama 

Here are a few of the top local housing markets in Alabama for 2024:

1. Huntsville

Huntsville is Alabama’s largest city, located in the Appalachian region of the state. Redfin describes Huntsville’s housing market as “somewhat competitive,” with a median home sales price of $340,000 in November 2025, up 6.3% since last year Hot homes in the area can sell in as few as 11 days, and the city is seeing significant migration from more expensive cities like Washington, DC; Seattle; and Los Angeles. 

2. Montgomery

Montgomery is Alabama’s capital city and the birthplace of the Civil Rights Movement. The median listing price in Montgomery is lower than Huntsville’s, at $190,000 in November 2025. However, the city’s housing market remains a seller’s market as prices trend upward. 

3. Birmingham-Hoover

Birmingham is the county seat of Jefferson County, Alabama. Hoover, part of the Birmingham Metropolitan area, is known for its growing suburban communities with premium homes and public schools. The median sale price of a home in Birmingham was $162K last month, up 2.5% since last year.

Economic Factors Impacting the Alabama Housing Market 

A holistic view of Alabama’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below: 

Mortgage Rates 

High mortgage rates remain a headwind for Alabama buyers going into 2026, though conditions have eased from 2023 peaks. Average 30-year fixed rates have generally hovered in the mid-6% range through late 2025, closely tracking national trends reported in the Freddie Mac PMMS. Elevated rates continue to limit affordability and keep many owners “rate-locked,” which constrains listing activity and inventory. Buyers should watch for further rate relief, as even modest declines could improve affordability and encourage more sellers to re-enter the market.

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Alabama. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income. 

Population Changes and Demographics 

Alabama’s labor market remains relatively strong heading into 2026. The state’s unemployment rate has generally hovered near 3% through late 2025, consistently below the national average according to the U.S. Bureau of Labor Statistics. A tighter labor market supports household income stability and helps sustain housing demand, particularly in larger metros like Birmingham, Huntsville, and Mobile. However, migration patterns and sector-specific job shifts across the Southeast continue to influence where demand concentrates, creating localized variation in pricing and competitiveness across Alabama markets.

Alabama Housing Market Forecast 

Alabama’s housing market is stabilizing rather than rebounding sharply as it moves into 2026. Inventory has increased compared with the tight pandemic-era market, and listings and sales activity have picked up modestly in many metros, according to Alabama market reports. However, elevated mortgage rates continue to restrain demand and keep conditions tilted toward sellers in some price ranges. Analysts expect activity to strengthen if rates ease further, but most forecasts point to gradual normalization rather than rapid growth going into 2026.

Likelihood of Alabama Housing Market Crash  

Most people tuned into real estate in Alabama agree that a housing market crash is unlikely in 2026. As is the case for many southern cities, Alabama has many benefits that will continue to attract new homeowners to the area, including low cost of living, low unemployment, and favorable tax policies. The state’s overall affordability and revitalized housing market means conditions are likely to remain positive into 2024. 

Forecast for The U.S. Housing Market 

Now that we’ve looked at Alabama’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States' current median existing-home sale price is around $415,200 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 3 months, keeping conditions constrained.

We’re currently in a seller’s market with buyers looking at continued rising house prices—although they are rising at a slower pace compared to previous years.. The same trend can be seen with renters. Housing continues to appreciate, in general.

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In 2026, he predicts that existing home sales will rise an additional 13%. Yun expects mortgage rates to stabilize at the lower end of the current 6-7% range through 2025 and 2026 as the Federal Reserve continues gradual rate cuts. There's an anticipation of a more balanced market in the coming years, with moderate price growth and a greater amount of Americans re-entering the market.

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Year-to-date single-family housing starts were down about 7.1% in 2025, whereas starts for buildings with five or more units were up roughly 14.5% Higher mortgage rates and inflation (affecting price of materials) were the main causes.

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. According to the National Association of Home Builders, approximately 74.9% of U.S. households were unable to afford a newly built median-priced home in 2025. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.

Alabama Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Renter affordability remains a challenge heading into 2026. Rent growth has cooled from the pandemic surge as new multifamily units entered the market, but rents in many areas still rise faster than wages, which keeps cost burdens high for lower and middle income renters. National survey data show that a significant share of renters continue to spend over 30 percent of their income on housing and utilities, and lower income households remain the most likely to fall behind on payments.

Higher interest rates have also slowed multifamily lending and new development. Federal Reserve lending surveys report tighter credit standards and weaker demand for multifamily loans through 2024 and 2025, which may limit future rental supply. The rental market is more stable than during peak growth years, but affordability pressures continue in many parts of the country.

This short summary leads directly into Alabama’s current rental market. Below are just a few of the current trends for Alabama’s rental market based on data pulled from Zillow: 

Alabama Rental Market Key Trends 

• Median rent: $1,44

• Month-over-month rent change: +$34 

• Year-over-year rent change: +$19

• Available rentals: 8,821 

Conclusion 

Alabama’s housing market remains one to watch heading into 2026. Economic growth and shifting migration trends continue to draw buyers from higher cost states in search of greater affordability and stable home values. While conditions vary by region, the market is generally strengthening as inventory improves and buyer activity gradually rebounds. Analysts will continue monitoring local trends alongside broader influences such as mortgage rates, employment conditions, and new construction.

FAQs

What is the current median home price in Alabama going into 2026?

The median home price in Alabama has increased modestly year-over-year, with statewide prices trending upward while remaining below many national averages. Individual metro areas vary, with Huntsville sitting higher than much of the state and Birmingham and Montgomery remaining more affordable.

Is Alabama currently a buyer’s market or a seller’s market?

Alabama is gradually moving toward a more balanced market as inventory improves, but some metros still lean toward sellers, especially in areas where demand remains strong and listings are limited.

How are mortgage rates affecting Alabama homebuyers?

Elevated mortgage rates continue to challenge affordability and keep many homeowners from selling due to rate lock-in. Even small rate declines may encourage more listings and strengthen buyer activity heading into 2026.

Which cities in Alabama have the most competitive housing markets?

Huntsville remains one of the most competitive markets, with strong buyer demand and faster-moving homes, while Birmingham–Hoover and Montgomery show steadier conditions with improving inventory.

Are home prices expected to rise or fall in Alabama in 2026?

Most outlooks suggest gradual stabilization rather than rapid price swings. Prices may rise modestly in higher-demand metros, while other areas may see slower growth as inventory increases.