According to the latest information, rising interest rates on mortgage loans have had a significant influence on the decline in residential sales. This process began in April 2022. So, in order to predict the future market movement, it is worth paying attention to the indicators of median prices and sales in April and May of this year.
The increase in interest rates on loans was used as a means to combat rising inflation. But currently, the growth rate of inflation shows no signs of reduction. At the same time, the market suffers from a scarce supply of new housing units. All of this leads to a natural increase in the purchase prices of real estate.
On the other hand, offers that enter the market are sold out instantly to the remaining buyers.
In May, it took only 9 days on average to conclude a contract for private houses after they went on the market. Townhouses and condominiums are sold in 10 days on average. The median indication reveals that within the first 9–10 days after going on the market, half of the available houses are bought. The remaining supply is sold out during the remaining days of the month.
The speed of the contract conclusion is on the same level as in May 2021 for private houses. It has also become 19 days shorter for condominiums and townhouses.
In May, the number of contracts for private homes reached 28,861 units in Florida. It means a decrease of 6.9% in annual terms. The townhouse/condominium number is at 13,265 contracts, which is 14.4% less than in May last year.
It should, however, be noted that, despite the high speed of contract conclusion, the contract can be closed after 30–90 days after signing.
In the meantime, the lower number of contracts comes with an increase in new ads for sale. As regards the private housing segment, the growth of new offers amounted to 10.2% in annual terms. For townhouses and condominiums, the growth of new offers was less successful and reached 3.4%. In April and May, the number of new ads for sale grew by 23% for private houses and by 16% for townhouses and condominiums in a month. In total, by the end of May, the market had 31.5% more offers for private homes and 20.5% more offers for townhouses and condominiums than a year earlier.
Considering the sales decline and the growing number of new offers, we can expect the Florida market to solve the problem of acute housing shortages. But it is too early to talk about these developments at the moment.
The state’s median price for detached homes was $420,000. It showed an increase of 21.8% in annual terms. For condominiums and townhouses, the median price reached $322,000. It rose by 28.8% year-on-year.
According to information provided by the Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, the largest American mortgage agency, in May, the interest rate for a 30-year fixed-rate loan reached 5.23 points. In May 2021, the interest rate on the same loan was only 2.96 points.