Inventory Surge Linked to Mortgage Rates

Florida’s real estate landscape has been notably affected by fluctuations in housing inventory and mortgage rates over the past few years. Data from Altos reveals that the state’s housing inventory began its ascent in June 2022, reaching a peak year-over-year growth rate of 150% by April 2023.

The increase in homes for sale is closely tied to rising mortgage rates, which began a significant upward trajectory in October 2021. As mortgage rates climbed, so too did the inventory of available homes.

Current Inventory Trends

Following a period of explosive growth, the rise in inventory has plateaued around a rate of 30%, coinciding with a stabilization of mortgage rates. Conversely, when mortgage rates showed signs of easing, Florida’s inventory experienced similar declines.

Impact on Home Prices

As inventory levels have surged, many regions across Florida, including Miami, Tampa, and Orlando, have witnessed declines in home prices. The median home price in Miami has fallen weekly since May 2024, and similar trends are evident in Tampa and Orlando since June 2024. Jacksonville followed suit in October, with North Port-Bradenton-Sarasota experiencing a price drop starting in February 2023.

Sales Trends Amidst Economic Uncertainty

Despite the combination of rising inventory and falling home prices, home sales across major Florida metropolitan areas have declined year-over-year. This trend has largely persisted since mortgage rates began their upward trajectory. Many prospective buyers are taking a cautious approach to the market, driven by broader economic uncertainties, including the effects of the global trade war that commenced during President Donald Trump’s administration.

The fluctuations seen in the stock market have impacted the yields on the 10-year Treasury bonds, leading to a scenario where mortgage rates might decrease sufficiently to offset potential inflation stemming from the trade war.

Conclusion: A Cautious Path Forward

The intersection of rising inventory and decreasing home prices has not yet stimulated buyer interest significantly. With economic indicators remaining volatile, many prospective buyers may opt to adopt a wait-and-see stance. Should inflation pressures continue to influence household budgets without sufficient reductions in mortgage rates, Florida’s housing market may face further challenges ahead.