Florida Housing Market Update: April 2023

Florida Housing Market Update: April 2023

Brad O’Connor Directly addresses camera: The pace of existing home sales in Florida remained sluggish in April, though an important milestone in home sale prices was also reached, all according to the latest housing market statistics from Florida Realtors.
Let’s start by looking at a chart of closed sales of existing single family homes in Florida over the last few years, and let’s focus specifically on this year and last year. Compared to one year ago in April 2022, closed sales were down by a little over 17% this April. That’s slightly worse than what we saw in March, when we were down by 15% year-over-year. But, it’s still an improvement over February’s decline of 21%, and significantly better than January’s decline of 32.5%.

One question we might ask is how April’s flash flood event in South Florida impacted the number of closings. To explore that, it might be helpful for us to take a look at this map of the state’s 22 metropolitan areas. As one might expect, the most single-family home sales were closed in the state’s two largest metros, South Florida and the Tampa Bay area. Despite having only half the population of the South Florida metro, the Tampa Bay area had more single-family home sales in April. But that’s actually a normal occurrence, simply due to the fact that single-family homes make up a much larger share of the housing stock in Tampa Bay than in condo-heavy South Florida.

So let’s instead look at the year over year percent change in April sales for each metro. South Florida’s year-over-year decline in April was about 21%, which is slightly more than the statewide decline of 17%, but comparable to what we see in Northeast Florida, the Panhandle, and Southwest Florida, as well. So although real estate activity was almost certainly disrupted in the most affected neighborhoods, the broader South Florida metro did not see a severe impact to closed sales. If anything, this map shows us that year-over-year sales declines are still widespread across all markets in the state.

Now, let’s jump back to the statewide chart of single-family home sales for just a second. While we usually focus on year-over-year changes because they aren’t influenced by the seasonality of the real estate market, it’s hard not to notice that there were almost 3,000 fewer closed sales in April than in March, a month-over-month decline of nearly 11%. A similar decline occurred at this time last year, but that one was partly due to the shock of mortgage rates starting to take off. This year, mortgage rates are much higher but have at least been stable, with the average 30-year fixed rate staying in the 6 to 7% range. There *were* 3 fewer business days in April than in March – that’s 13% fewer business days, so that probably had something to do with this decline, but it doesn’t fully explain it.

Let’s focus on the latter half of last year, and let’s compare it with the same time period three years before in 2019, the last full year before the pandemic. Notice that in each month, there were significantly fewer closed sales in 2022 compared to 2019. That’s not surprising given that in late 2022, we faced much higher mortgage rates and home prices, as well as far less inventory. What is a little surprising, though, is what we see when we look at the first quarter of this year compared to three years before. Through March of this year, we were actually tracking pretty closely with the number of sales we were seeing in the last three months leading up to the pandemic. Closings were a little suppressed in March 2020 because of the onset of the pandemic, but the real impact to closings didn’t fully manifest until April. So this year, we were looking pretty good by pre-pandemic standards for Closed Sales, up *until* April.

By comparison, four years earlier in 2019, sales were not down, but rather up month-over-month from March to April. That was actually a normal occurrence in the pre-pandemic market. Let’s look back at 2012 through 2019 on the chart to see. Sales were down from March to April back in 2012, as we were still in recovery mode from the Great Recession, but the only other time it happened during this stretch was in 2017. In the other six years during this period, April’s sales outpaced March’s sales – not by a lot in most cases, but they certainly were not down significantly. So this will be something to watch over the rest of the spring buying season and into the summer. Will we be trending lower compared to pre-pandemic levels, like we did late last year, or is this just a temporary blip? It’s not a great sign that the number of homes that went under contract in April was also down month-over-month, but on the other hand, if we look at the count of how many listings were under contract as of the end of April, that was *up* compared to the end of March, which suggests that the typical time between the contract date and closing date for purchases is rising, and perhaps many of the closed sales that seem to be missing for April are simply coming in May instead.

New listings of existing single-family homes for sale were down 20% year-over-year in April, as many potential sellers continue to find it hard to justify listing their homes when they’d have to face a much higher mortgage rate on their next purchase. As a result, single-family inventory fell on a month-over-month basis for the fifth straight time in April. It still remains over 80% higher than it was at this time a year ago, but is also still well short of pre-pandemic inventory levels. The median price for existing Florida single-family homes in April, meanwhile, was $410,000, which is exactly what it was last April. This brings an end to a very remarkable more than 11-year stretch – that’s 135 months, to be exact – where the monthly median single-family home sale price in Florida was up on a year-over-year basis. The impact of the higher mortgage rate environment we’re in and the scarcity of homes on the market has led to this moderation in home price growth, but the major detrimental impact of this type of environment remains the decline in listings and sales.

The streak of consecutive months of median price growth is, on the other hand, still very much alive over in the townhouse and condo category. In April, the median price in this category was $325,000, a year-over-year increase of almost 5%. Closed sales for this property type category, meanwhile, were down by almost 27% year-over-year, while new listings declined by 13.5% on the same basis. Townhouse and condo inventory has remained relatively flat so far this year, but just as the case has been on the single-family side, it’s much higher than a year ago and yet, still much lower than it was before the pandemic, as well.

That’s about it for this month’s market recap. Early on, we gave you a taste of some local area statistics, and, well, we have a lot more where that came from. So Realtors, as always, be sure to check out sunstats.floridarealtors.org for interactive local market statistics for your area. See you next month!