Most home buyers in the U.S. are dealing with a low number of property listings as homeowners with low mortgage rates hold off on selling.
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Several cities in the Sun Belt are defying the trend.
In multiple metros in Florida, in particular, home listings surged in March, according to a new report by real-estate brokerage Redfin RDFN, driven by an uptick in home-building as well as shifts in homeownership costs.
The report, released Thursday, includes 85 major metropolitan areas in the U.S. with populations of at least 750,000.
The number of homes for sale in certain metro markets in Florida in March rose 50% from a year ago, indicating that housing supply is surging, the brokerage said, offering good news for home buyers straining to afford higher mortgage rates and prices.
Supply has increased drastically in the Sun Belt due to the ramp-up in new construction, Daryl Fairweather, chief economist at Redfin, told MarketWatch. Developers have been responding to the influx in migration in areas around the Sun Belt, she added.
Many of those homes are still sitting on the market, and prices are stagnating, the company said.
Housing supply has increased the most in the following five metro areas, on a year-over-year basis, according to Redfin:
Metro | Year-over-year increase in supply |
Cape Coral, Fla. | 51% |
North Port-Sarasota, Fla. | 48% |
Fort Lauderdale, Fla. | 30% |
Tampa, Fla. | 29% |
McAllen, Texas | 25% |
The drop in demand for homes in Florida has been dramatic, a local real-estate agent said.
“Two years ago, the North Port metro was one of the most competitive housing markets in the country because it was affordable for remote workers and there was a shortage of homes for sale, but none of those things are true today,” Eric Auciello, a Tampa, Fla.-based sales manager at Redfin, said.
“Sarasota, in particular, has been overvalued for decades, and the chickens have finally come to roost,” he added.
Higher supply is also pushing more homeowners to slash their asking prices. The metro areas which saw the highest share of listings with a price cut include the following:
Metro | Share of listings with a price cut |
North Port-Sarasota, Fla. | 48% |
Tampa, Fla. | 44% |
Indianapolis, Ind. | 43% |
Cape Coral, Fla. | 41% |
Denver, Colo. | 37% |
One other reason why the Florida market in particular is seeing supply outpace demand is due to homeowners facing difficulties with insurance premiums, higher homeowners association fees and maintenance costs, Fairweather said.
“So the mortgage rate lock-in effect becomes a smaller part of the decision-making process to keep owning or to sell,” Fairweather.
As climate change increases the frequency and intensity of natural disasters, hurricanes and flooding, many insurers have hiked prices to reflect the higher level of risk. Homeowners in turn are seeing their premiums jump.
Florida homeowners pay the most for home insurance in the U.S., with an average annual rate of $11,759 projected for 2024 — significantly higher than an projected national average of $2,522.
So will home prices crash in these metros? Florida has the most price drops, so it seems like the market is correcting, Fairweather said, but demand is not drying up completely.
Lower mortgage rates could also prompt more home buyers to enter the market, even as homeownership costs remain challenging in the state.
To be sure, the housing-market dynamic could not be more different at the national level.
New listings nationwide dropped 6.3% in March, compared to the previous month, Redfin said. Many homeowners are unwilling to sell their homes, prolonging a lock-in effect, as they have mortgage rates that are far below the current 7% rate.
The median U.S. home sale price rose 5% year-on-year in March to $420,357. Only 16% of homes for sale nationwide had their prices cut.
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