TUSCALOOSA, Ala. – For the first time this year, the number of existing homes sold declined from the previous month, signaling a possible slowdown in the state housing market, according to statistics from the Alabama Real Estate Research and Education Center at The University of Alabama.

After setting continuous records for months, the number of existing homes sold decreased by 4 percent from 5,739 in June to 5,504 in July. On a year-to-date basis, however, the housing market is still in record territory and “it is certainly still too early to suggest that this market has peaked,” according to Dr. Leonard Zumpano, director of the center.

“The July downturn may simply reflect the higher interest rates that prevailed during July, which have since moderated again,” Zumpano said.

Existing home sales also declined at the national level in July as well, down 2.9 percent from June. Year-to-date home sales, however, are up a staggering 43 percent from last year at this time.

The average price for existing housing also declined slightly in July to $133,438 from $139,375 in June. For the nation as a whole, the average selling price increased slightly in July to $191,300 from $191,000 in June. During July, the state’s average selling price fell 4.2 percent, but is 2.4 percent higher than in July 2003.

For the state, the average number of days on the market fell to a very tight 127 days in July, down from 132 days in June, according to the Center.

“This is the lowest number of days on the market in the last nine years,” Zumpano said. “This occurred as the supply of homes continued to fall, down 3.2 percent from 26,188 in June to 25,357 in July. Year-to-date, the number of homes on the market fell by 1,750 units compared to last July. Despite the July decline in average selling price and the number of homes sold, the rest of the housing statistics suggest that it remains a seller’s market in Alabama.”

At the local level, existing home sales decreased in 14 locations and rose in only six reporting areas. The Montgomery Metro Area defied the downward trend with a solid increase of 62 existing homes sold, an increase of 11 percent and by far, the largest movement in July’s homes sold.

Average selling price rose in eight areas and fell in 12 locations. The average number of days on the market rose in only seven areas, remained unchanged in one, and fell in the remaining 12 locations.

Whether the decline in the July housing statistics represents the beginning of a trend will depend on what happens to mortgage interest rates and the labor market over the next few months, Zumpano said.

“If mortgage rates tick up as we move into the fourth quarter and the labor market remains sluggish, the housing market could be adversely affected. Unfortunately, only time will tell. Although inflation still seems in check, oil prices remain high and the ballooning federal budget deficit will exert upward pressure on interest rates should the economy pick up steam,” Zumpano said.

The Alabama Real Estate Research and Education Center is part of The University of Alabama’s Culverhouse College of Commerce and Business Administration. The UA business school, founded in 1919, has been recognized repeatedly for offering a high-quality, cost-effective education.