Home sales are down in Florida, and inventory is rising, but experts are calling this a return to normal after years of outsized growth.
“When you start to see this leveling off, it looks like a decline,” said Tim Weisheyer, president of Florida Realtors and broker-owner of Dream Builders Realty and dbrCommercial Real Estate Services. “But you have to look at the overall trend.”
May saw 24,756 total home sales in the Sunshine State, a 5.7% drop year over year, according to data from Florida Realtors. The median home price also fell 2.7% from the previous year to $415,000.
But Weisheyer points to the extreme rise of Florida’s market amid the COVID-19 pandemic. Home prices are 54% above where they were in 2020, according to the association's report.
“You have to adjust your perspective to the fact that we had such radical increases for so long,” Weisheyer said. “We’re not looking at a falling off of home prices; we’re looking at a leveling off.”
This view of a minor correction is shared by Ken Johnson, the Christie Kirkland Walker Chair of Real Estate at the University of Mississippi.
“Worst-case scenario, we are almost certainly coming in for a soft landing in the state’s housing markets relative to the last housing crash,” Johnson said. “The chances of a major housing crash this time around are very small.”
Johnson is co-creator of the Real Estate Initiative, which looks at real housing prices in the country’s 100 biggest markets and compares them to where they would be if pricing trends moved evenly and predictably.
In Orlando, for example, Johnson finds home prices to be 14.6% higher than where they would be if they just followed their trend line. But for comparison, in 2006, at the height of the bubble that led to the Great Recession, prices were more than 60% above their expected rate.
“Housing prices will [revert to the mean],” Johnson said. “Prices are going down, but not significantly.”
Listings jumped nearly 30% in May
Inventory has also been rising in the market, with listings up 28.8% versus May 2024, according to Florida Realtors.
Johnson pegs all these effects to a slowdown in interstate migration to Florida. The third-most-populous state saw a net increase of 63,346 residents from other states, as opposed to 317,923 transplants in 2022 and 194,438 in 2023, according to Census Bureau data.
“People aren’t leaving Florida,” Johnson said. “They just aren’t moving in at the rates we saw [following the pandemic].”
Florida now has roughly 5.6 months of housing inventory. Many economists consider a six-month supply to be a balanced market, favoring neither buyers nor sellers.
Johnson said that during the boom years, developers built many apartment buildings and multifamily rental properties, which attracted people who either owned them before or would have bought them now.
“People can switch between renting and owning,” he said. “That’s what we’ve done in most parts of the state. We built some multifamily, and people just switched to rental or didn’t buy when they moved to their first household.”
Homebuilders also built heavily in the state in the past five years. Weisheyer said the slower influx of new residents might take a toll on those developments, but ultimately, the houses will be filled with the nation's current housing shortage.
“What [builders] are doing is really planning for the next wave, understanding that no matter what, there are a flood of buyers that need to come into the marketplace,” Weisheyer said.
Home price growth in US slows as inventory builds
And Florida isn’t largely out of step with the rest of the U.S. Research by Homes.com found that home prices grew by only 1% nationally in May year over year, and at least six major Sun Belt markets, including Jacksonville and Tampa, saw decreases. National inventory increased by 17.2% to nearly reach pre-pandemic levels.
Condominium sales in Florida did see a steeper decline than single-family homes, dropping 19.9% from the previous year, with inventory rising to a 10.3-month supply, according to Florida Realtors. That is likely related to regulations the state passed following the Surfside condo collapse in 2021. Those mandates have placed expensive new assessments on some units, making them difficult to sell.
The latest condo safety legislation Gov. Ron DeSantis has signed into law offers some relief to cash-strapped owners and condo associations.
Weisheyer said indicators overall point to a consistently rising market.
“Honestly, I don’t want to be Pollyanna, but I’m really not concerned about it.”