In a promising development for homebuyers, February brought Alabama its most affordable housing month since April 2024 with both home prices and mortgage rates taking a dip just in time for the spring buying season.

But the question remains whether this is a turning point or a temporary break in an ongoing affordability crunch. Here’s what you need to know:

Housing affordability is largely shaped by three key elements — income, home prices and mortgage rates. While household incomes have remained relatively unchanged, two other metrics saw favorable shifts for buyers in February. Alabama’s median home sales price dropped by nearly $9,000 compared to January, settling at $211,020, and, at the same time, average 30-year mortgage rates fell from 6.95% at the start of the month to 6.76% by the end — making a significant difference in monthly mortgage payments for many buyers​.

“Most home buyers need to finance their purchases. Over the course of a 30 or even 15 year mortgage, a difference in one’s interest rate of even a fraction of a point can result in total loan repayments that differ by tens of thousands of dollars,” AAR economist Dr. David Hughes said. “With that, it’s unsurprising that buyers now, as the spring market gets underway, are choosing to purchase homes — they’re saving money.”

In short, the alignment of lower home prices and interest rates has meant more buying power for Alabamians.

While February’s affordability boost is good news, we must consider if it can continue.

“I would expect, as is seasonally the case, that home prices will edge up as we approach the hotter market that typifies the late spring and early summer,” Hughes said. “But if we continue to see interest rates stay where they are or even cool somewhat, that can offset the higher sales prices to maintain affordability for typical homebuyers.”

With rates projected to continue a slow downward trend — potentially dipping as low as 6.0% to 6.5% by year-end — and inventory expected to increase, the market could maintain relative affordability through much of 2025.

Housing affordability isn’t just a local conversation. Hughes notes that Alabama’s slower growth rate and healthy housing supply likely position it as a more affordable state compared to many of its neighbors.

Urban centers in states like Florida and Georgia — such as Orlando and Atlanta — have experienced surging demand and limited inventory, contributing to higher home prices and decreased affordability. Alabama’s steady growth and balanced supply combine to provide a favorable environment for buyers looking for options and value.

For buyers, especially first-timers or those who have held off on re-entering the market, the conditions are more favorable than they’ve been in nearly a year. For sellers, this uptick in affordability may attract more serious buyers as the market heads into peak season.

While time will tell what interest rates and home prices will do, February’s data signals a more accessible market and a potential momentum shift as spring gets underway.