A Final Look at 2025 Birmingham Housing Stats

2025 Birmingham Housing Stats: A Look in the Rearview Mirror

How was 2025 for you? I hope it was everything you expected. For one of my first blog posts of the year, I always like to review the local real estate market for the prior year and look ahead to see what we might expect for this year.

Going into 2025, the sentiment that I was picking up on was that people had been waiting to see the outcome of the presidential election before making a move. Now that the election was over, anyone interested in buying or selling a home could move forward knowing a little bit more of what to expect. After all, elections can have a significant impact on the market and, in turn, interest rates.

While interest rates ended up in December lower than what they started in January, I don’t think it was as quick or as much of a drop as what buyers were expecting. While interest rates are an important factor in real estate, there are other elements that contribute to a healthy market. Today, I thought I would take a look at some of the metrics that describe the real estate market in Birmingham, Alabama, in 2025. If you have anything to add or a question to ask, please leave a comment below. I’d love to keep the conversation going.

CREDIT: Data from the Greater Alabama MLS and Alabama Center for Real Estate was used in the creation of the charts included in this blog post.

Sales Volume

The Birmingham, Alabama, metro area, which includes Jefferson and Shelby counties, has seen a small increase in the number of homes sold from 2023 to 2025. This increase is a move in the right direction when compared to the decline we saw from 2021 to 2022 due to the upward shift in interest rates.

Before 2021, the local real estate market had steady increases in sales over the prior 10 years. This was a bounce back after the real estate crash that most of the country experienced from 2008 to 2010.

When comparing 2024 and 2025 monthly sales volume, the numbers jump around month by month, which could be caused by seasonality as well as the mortgage interest rates at the time. On an annual basis, sales volume was almost the same

Median Sold Price

As if most people didn’t already know, home prices have been steadily increasing every year, and this was no different from 2024 to 2025. You can annualize percent increases over the year, but to get a better understanding its helpful to look at each month and look at month-over-month numbers from one year to the next.

Based on the data, the Birmingham metro housing market continues to show increases in median home prices compared to last year, with prices being higher in every month of 2025 than in 2024. Most months are posting year-over-year increases in the mid-to-upper single digits, which suggests demand has remained fairly consistent, possibly due to a slight decline in interest rates. The strongest increases occurred in late winter and early spring, when prices jumped close to 10% compared to the same time last year.

As the year moves into summer, price growth becomes more moderate, with June showing almost no change year over year. That kind of flattening is typical during periods when affordability pressures start to show up, even if overall demand remains steady. Still, prices quickly picked back up in July and August, indicating buyers are still actively looking for homes.

Heading into the fall and early winter, the Birmingham real estate market appears stable. Price increases remain positive but not as elevated as other parts of the country, generally staying in the 5%–7% range. Overall, the numbers point to a stable market, with gradual appreciation rather than sharp swings in either direction.

Housing Supply

The lack of adequate housing supply has been the underlying issue for housing affordability in the Birmingham area and even the nation. While Alabama as a whole is more affordable than the nation, the limited supply does impact prices. The limited supply of homes and comparatively higher interest rates have still priced some buyers out of the market.

The supply of homes has been on a steady decline after the housing crisis of 2007-2008. While President Trump has touted the 50-year mortgage as one way to make buying a home more affordable, I don’t think that fixes the problem. It makes owning a home more affordable on a monthly basis, but the total payback of the loan increases significantly over a 30-year mortgage.

A decrease in interest rates without an increase in supply will not fix the problem either. We will have another COVID-era scenario where more buyers will enter the market due to the lower mortgage costs; however, prices will again be driven up due to limited supply.

Housing inventory has steadily increased since interest rates started increasing in 2022. The Birmingham metro area had just under 4,000 homes actively listed for sale in December of 2025, which translated to 3.4 months of inventory. This is considered a balanced market.

These numbers have hovered around this level since the increase in interest rates and match the levels we had in 2019, just before COVID.

Listing Cancellations

Listing cancellations don’t get much attention, but they can tell us a lot about what’s really happening in the market. A cancellation usually means a home was listed but never found a buyer for various reasons.

In many cases, it comes back to pricing and expectations. If a house is priced based on what the seller needs rather than what the market will support, buyers will see this and not show up. When cancellations increase, it’s a sign that sellers and the market are not on the same page.

When we compare full-year numbers for Jefferson and Shelby County single-family homes, the change from 2024 to 2025 is clear. Total MLS listing cancellations increased from 2,281 in 2024 to 2,688 in 2025, an increase of nearly 18%.

Several months show sharp jumps, especially January and June, where cancellations rose significantly year over year. While a few months were relatively flat and July showed a small decline, the overall trend is higher. Some of these listings could have been relisted and sold; however, the exact number is unknown.

So what’s driving this? In my experience, it usually comes down to pricing and expectations. Sellers are still looking back at peak-market numbers, while buyers are looking at current conditions. When those two views don’t line up, listings sit.

Eventually, some get canceled instead of adjusted. Accurate pricing matters more in this type of market than it did a few years ago. The margin for error is smaller. Homes that are priced correctly still sell. Homes that aren’t often end up as another cancellation statistic.

Year Over Year and Month Over Month Metrics

When you look at both the December numbers and the full-year comparison for Jefferson and Shelby County, the numbers are pretty clear. Prices did go up in 2025, but the increases were not drastic.

On a yearly basis, the median sold price rose about 6.5%. Price per square foot increased at a similar rate. December showed the same pattern. This wasn’t a market like we saw several years ago that was driven by a larger number of buyers competing for a limited inventory of homes. In 2025, buyers paid almost full list price when the house was worth it, meaning it was in good shape and showed well.

Sales activity tells a similar story. Total sales for the year were almost flat, up just over 1%. December closings were also slightly higher.

There was sales activity in December; however, due to seasonality, it was less active than at other times of the year. At the same time, the inventory of homes actively listed for sale decreased in December, which resulted in the months of supply dropping into the low-three-month range in December.

When inventory gets that low it starts looking like a seller’s market, but only for listings that are priced to the market. A lower inventory of homes does not automatically mean that a home is going to sell immediately.

Even in this type of market, a home must be priced accurately, or it will not sell. The home will sit on the market and go through multiple price reductions and have a longer DOM. By pricing the home correctly from the beginning, you avoid this.

Changes in the market can be easily seen by looking at the Days on Market (DOM) stat. For the full year, average days on market increased from 35 to 41. Median days jumped from 11 to 16. December showed the same trend. In a nutshell, it’s taking longer to sell a home.

Buyers in today’s market are a little more patient when house shopping. They are comparing options and walking away from listings that are overpriced. Even though the sale-to-list price ratio held steady at 98%, it often took price adjustments or negotiations to get there.

Why These Stats Matter

From an appraisal standpoint, these numbers matter. During my day-to-day work as an appraiser, I’m still seeing an increase in prices, but not as much as several years ago. Homes are taking longer to sell, and as previously noted, sale price to list price ratios are holding steady. This tells me that accurately pricing a listing is of top importance.

When listings are priced accurately, we are seeing an upward trend in both the median and average sold price and a lower DOM. The month-to-month data shows that buyers are cautious, especially when homes are overpriced. I have noticed an uptick in my pre-listing appraisal business recently, which tells me that agents and sellers want to get the list price right.

When a home is not priced to the market, two things can happen. If you underprice it (this happens less often), then it will sell quickly, but you will leave money on the table.

The second scenario of overpricing happens more often. When this occurs, the home will sit on the market, go through multiple price reductions, and possibly sell for less than what it would have sold for if it had been listed lower in the beginning.

I’ve heard that some sellers would rather price their home high to start and then reduce the price if they don’t get any activity, but in the real world, it just doesn’t happen that way. Potential buyers see the price reductions and think that something may be wrong with the home. It then sits on the market and can potentially sell for less than what it is actually worth.

Sometimes, an overpriced home might find a buyer, but when the appraiser for the buyer’s mortgage company does their job, the appraisal may come in lower than the contract price, and the deal can fall apart. This is where appraisers can get a bad reputation for killing deals, but in situations like this, the deal was dead from the start when it was overpriced.

Conclusion
If you have questions about the Birmingham real estate market or how the appraisal process works, feel free to reach out. I’m always happy to help and would love to be your go-to appraisal resource. As always, thanks for reading.

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