Rising mortgage interest rates are depressing sales of existing homes, according to a Florida Realtors expert.
Rising mortgage interest rates, high inflation and still-tight inventory levels were factors influencing Florida’s housing market in May, with fewer closed sales compared to a year ago, according to Florida Realtors®’ latest housing data.
“Households everywhere are feeling the pinch of high inflation,” said 2022 Florida Realtors President Christina Pappas, vice president of the Keyes Family of Companies in Miami. “Homebuyers are also facing the challenges of rising interest rates and tight inventory of for-sale homes, causing some to hit the pause button on their plans. Still, the median time to contract for single-family existing homes in May was nine days – the same as it was in May 2021. The median time to contract for existing condo-townhouse units last month was 10 days, compared to 19 days a year ago.
“Real estate market conditions are always changing, but buyers and sellers can turn to a local Realtor for expertise, knowledge and support.”
Last month, closed sales of single-family homes statewide totaled 28,861, down 6.9% year-over-year, while existing condo-townhouse sales totaled 13,265, down 14.4% from May 2021, 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.
Rising mortgage interest rates continue to depress sales of existing homes in Florida, according to Florida Realtors Chief Economist Dr. Brad O’Connor, who added that the current level of sales is more comparable to the pre-pandemic years of 2018 and 2019 than sales in 2021, when mortgage rates were still near their all-time lows.
“This slowdown in the rate of sales was accompanied by an increase in the rate of homes listed for sale in May,” he said. “New listings of single-family homes were up on a year-over-year basis by 10.2% – the largest such increase since August of last year. New listings of townhouses and condos were up more modestly, by 3.4%.”
Dr. O’Connor explained, “With sales levels falling closer to historical norms and new listings on the rise in May, inventory levels are starting to rise, as well. The number of single-family homes actively listed for sale in Florida at the end of May was up over 23% compared to the end of April, and up 31.5% compared to a year ago. However, townhouse and condo inventory was up by almost 16% month-over-month, but still down on a year-over-year basis by 20.5%.
“Remember, inventory in each category – single-family homes and also for condo-townhouse properties – has remained at a very low level for some time, which means we’re still deep in seller’s market territory. But we’re starting to see some progress back toward a balanced market.”
The statewide median sales price for single-family existing homes in May was $420,000, up 21.8% from the previous year. Last month’s statewide median price for condo-townhouse units was $322,000, up 28.8% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.
On the supply side of the market, inventory (active listings) of single-family existing homes showed some year-over-year improvement in May; it was at a 1.4-months’ supply compared to a 1.1-months’ supply a year ago. Condo-townhouse inventory was at a 1.5-months’ supply in May.
According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 5.23% in May, significantly higher than the 2.96% averaged during the same month a year earlier.
To see the full statewide housing activity reports, go to the Florida Realtors Newsroom at http:// floridarealtors.org/newsroom and look under Latest Releases, or download the May 2022 data report PDFs under Market Data at http://floridarealtors.org/newsroom/market-data.
Florida Realtors® serves as the voice for real estate in Florida. It provides programs, services, continuing education, research and legislative representation to its 225,000 members in 51 boards/associations.