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Although this represents a significant decline, the sales pace in January is still ahead of last year at this time, and 2005 was a record-breaking year for Alabama.

Thought seasonable factors may be part of the explanation for falling prices and declining home sales, it appears that the housing sector is slowing down as we move into 2006. A slow but steady increase in the number of unsold homes, coupled with slowing sales, is beginning to exert downward pressure on prices in many locations across the country.

Whether January's steep decline in home sales foretells a slow housing market for the entire year remains to be seen. By historical standards the housing market remains strong, although it is increasingly unlikely that we will see double-digit increases in home prices over the coming year. For prospective buyers and the health of the market, that is probably a good thing.

Even though it is very early in the year, the Alabama housing market in 2006 is ahead of the market at the same time last year.

While experts continue to predict that residential real estate markets are slowing, it does not appear to be happening here. Despite the increase in supply, prices continue to rise, indicating strong demand for existing housing.

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