As Alabama's housing market moves from the traditionally busy summer season into fall, the market is carrying considerable momentum, with sales and prices posting notable year-over-year gains. If historical patterns hold, however, activity should begin to ease, bringing a seasonal slowdown after a strong summer.

So, what can REALTORS® expect as the year moves toward its final months? Here are four trends Alabama REALTORS® economists predict for this fall.

The summer market brought considerable momentum, with home sales increasing 19.8% year over year through July. Economists expect that momentum to continue into fall, but don't anticipate activity to match the summer peak.

"While sales typically slow moving into the fall, solid momentum should persist into the third quarter, but at a tempered pace,” said economist Evan Moore. “The year-over-year growth in home sales through each month of the second quarter (along with July) suggests robust pent-up buyer demand.”

Seasonality will play an important role as families settle into the school year and consumers turn their attention toward the holidays. The takeaway? Fall may bring a more measured pace after an exceptionally strong stretch of activity.

While sellers have continued to benefit from the demand for well-priced homes, the negotiating environment could become more favorable to buyers as the year progresses.

The picture is nuanced: Active listings have risen, yet homes have sold quickly enough that overall months of supply declined in July. Even so, supply remains well above pre-pandemic levels. As such, economists predict buyers may gain leverage, particularly on non-price terms such as inspections, seller-paid closing costs or other concessions.

"The balance certainly seems to have shifted toward sellers this summer as prices continued to increase, and that’s further indicated by the shrinking supply overall. That said, supply is still considerably above where it was pre-pandemic,” said economist David Hughes. “Looking forward, I would anticipate that the bargaining environment would favor purchasers somewhat as we seasonally expect sales numbers and prices to go back down.”

Hughes notes that listing volume also tends to dip heading into the fall and winter months — so a broader shift toward buyers isn’t guaranteed. Yet both economists agree the window to overprice without pushback has likely closed. For REALTORS®, this means leverage may look different depending on the property, price point and terms of the transaction.

Affordability could become one of the biggest factors shaping the fall market. July marked the sixth consecutive month of median price increases and the fifth monthly rise in mortgage rates.

Together, these trends are making homeownership more challenging.

Mortgage rates are especially important because earlier expectations for some rate relief in the second half of the year have not played out as hoped. Affordability conversations may become increasingly important as consumers weigh monthly payments alongside home prices.

"Affordability will likely act as something of a brake on the market this fall,” Moore said. “The price and rate increases are squeezing entry-level buyers, which should cool price acceleration and redirect demand toward lower price tiers.”

With sales, prices and inventory all posting gains, it’s fair to wonder how long every major metric can continue moving upward at the same pace. Economists agree that something will likely give as summer closes.

“Seasonality will almost certainly force them all to give,” Hughes said. “Sales units and prices typically break in the mid-to late summer. In recent years, it is most typical to see sales numbers and prices peaking somewhere between June and August, and I have little doubt we will see the same this year.” 

Time will tell if the fall market delivers the same level of activity seen during the summer or if historical trends prevail. As the year winds down, the balance among inventory, demand and borrowing costs will be an important dynamic for REALTORS® to watch.