Florida Realtors: Jan. closed single-family sales fell 32.5% as inflation, higher interest rates eroded demand, but for-sale inventory rose 134.2% to a 2.8-months’ supply.
ORLANDO, Fla. – Continuing trends from the final few months of last year, Florida’s housing market started 2023 with higher median prices and more inventory (active listings) in January compared to a year ago, according to Florida Realtors®’ latest housing data.
However, inflation and still rising interest rates above 6% continued to erode buyer demand: Closed sales of single-family homes statewide last month totaled 14,766, down 32.5% year-over-year, while existing condo-townhouse sales totaled 6,078, down 40.7% from January 2022, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Closed sales may occur from 30- to 90-plus days after sales contracts are written.
According to Florida Realtors Chief Economist Dr. Brad O’Connor, the decline in sales is not surprising since interest rates remain twice as high as a year ago; however, he notes the January drop in sales “is the smallest year-over-year decline we’ve had since last October.”
O’Connor also pointed out that the level of closed statewide sales for existing homes and condo-townhouse properties in Florida in recent months is tracking just below the level of sales the state experienced four years ago, prior to the pandemic.
“High mortgage rates are not only affecting homebuyers,” he says. “They’re also discouraging some potential sellers from listing their homes for sale, as well – particularly those who would be selling their primary residence and would therefore have to finance their next home at these higher rates.
“As a result, the level of new listings we’ve seen in recent months has been below normal and that trend also continued into January. New listings of existing single-family homes for sale were down 4.8% compared to a year ago. Over in the townhouse and condo category, the year-over-year decline in new listings was more modest at 2.4%. It’s important to remember that while these high interest rates are discouraging some potential sellers from listing their homes for sale, that’s not the case for all sellers.”
In January, the statewide median sales price for single-family existing homes was $389,990, up 4% from the previous year; for condo-townhouse units, it was $310,000, up 8.8% over January 2022. The median is the midpoint; half the homes sold for more, half for less.
“The ratio of active buyers to active sellers is the most important factor determining housing prices,” O’Connor says. “When this ratio is high, you have widespread bidding wars that drive up prices. That’s what we experienced from mid-2020 until the midpoint of last year. With mortgage rates dousing our hot demand levels over the course of the past year, that ratio has fallen – and therefore price growth has cooled off. However, because these high mortgage rates have discouraged potential buyers and potential sellers, this shift in the ratio of active buyers to active sellers has only resulted in the slowing of overall home price growth, not a full reversal.”
“While we’re seeing positive signs that for-sale inventory is beginning to increase in many local markets across the state, we have quite a way to go before we are back to pre-pandemic inventory levels – which keeps upward pressure on prices,” says 2023 Florida Realtors® President G. Mike McGraw, a broker-associate with RE/MAX Central Realty in Apopka. “Also, it’s important to remember that Florida had a shortage in housing supply even before the pandemic – so returning to those levels still means we’re falling short of a balanced market for buyers and sellers.”
Statewide inventory in January was higher than a year ago for both existing single-family homes, increasing by 134.2%, and for condo-townhouse units, up 90%. The supply of single-family existing homes was at a 2.8-months’ supply while existing condo-townhouse properties were at a 3.1-months’ supply last month.
© 2023 Florida Realtors®
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