Florida’s Rosy Glow Fades: Home Sales Slow Down Amid Rising Inventory and Mortgage Rates
The COVID-19 pandemic has brought about a surge in real estate sales, particularly in warm weather states like Florida. However, this rosy glow may be dwindling, as a new report suggests that homes in the Sunshine State are taking longer to sell. According to Realtor.com’s December 2024 Monthly Housing Report, homes in Florida are spending more time on the market, with the typical home taking 70 days to sell, nine more days than the same time last year and eight more days than the previous month.
This marks the slowest December since 2019 and the slowest month since January 2023. It’s also the ninth consecutive month where homes spent more time on the market compared to the previous year. The report found that the increase in newly listed homes contributed to an overall increase in inventory on the market, with a 4.8% increase in the South, while the Northeast and Midwest saw inventory decreases of at least 5.6%.
The report named the top four Florida cities with the highest inventory sitting on the market for more than 90 days, which include New Smyrna Beach, Palm Coast, Panama City, and Gainesville. The median days on the market for these cities were 95, 94, 94, and 91, respectively.
Experts attribute the slow market to increases in inventory, high mortgage rates, and extreme weather events. As mortgage rates hover around 7%, prospective buyers have been hesitant to enter the market. Many have been “locked in” to their current homes with much lower interest rates, making it harder to buy new properties. Additionally, recent hurricanes and other extreme weather events have left devastation and damage, resulting in increased insurance costs and reduced buyer confidence.
In Florida, an estimated 21.3% of mortgages have interest rates below 3%, 33.9% have rates between 3% and 4%, and 18.1% have rates between 4% and 5%. This means that new construction homes on the market may not attract the same pool of buyers they would have a few years ago.
Despite the challenges, real estate experts remain optimistic about the long-term prospects for the Florida market, citing the state’s continued popularity and the potential for new construction projects to revitalize the market. For now, however, the rosy glow of the pandemic-era real estate boom appears to be fading, replaced by a more subdued and competitive landscape.
