Market Update 
with Brad O’Connor Ph.D.
TRT: 11m 14s
Video Transcription

Brad O’Connor directly addresses camera:  The latest housing market figures for Florida are in. So let's start this month by focusing on the statistics for single family home sales in February. As usual, we did have a bit of an increase in closed sales from January to February, but we didn't see as much of a bump as we did last year. So while single family home sales were actually up year over year in January by a little over 3.5%, they fell by about 7% year over year in February.

This isn't entirely surprising, though, given that in January we saw that new pending sales of single family homes were down a little over 4% year over year. And that's usually a very reliable indicator of what direction closed sales will move in the following month. New pending sales, after all, are the number of sales that went under contract during the month.

And of course, most of those sales don't close until a month or two down the line.
Sales in February, meanwhile, we're down over 6.5%, so that tells us that in March, we probably shouldn't expect to be at or above 2024 levels, either for closed sales of single-family homes. As for the supply side of the single family home market, new listings our measure of how many properties were listed for sale during each month really came out of the gate strong in January, up by about 15.5% compared to January of 2024.

But you can see that in February, we reverted to a much more modest gain of about 3% year over year. That said, we are still tracking a bit above the level of new single-family home listings we are accustomed to seeing at this time of year. Over the past three years, the number of single-family homes coming onto the market each month has generally exceeded the number of homes either selling or being withdrawn from the market each month.

So that means that the number of active listings for sale as of the end of each month, what we call active inventory, has generally been on the rise, with new listings still higher than recent levels and sales trending below recent levels. We should expect that trend to continue into the spring buying season here in Florida. At the end of February, we had an inventory of close to 112,000 active single-family home listings.

That's about 32% more active listings than we had at the end of last February, and about 14% more than the average February inventory level from the pre-pandemic years of 2014 through 2019. It is worth noting, however, that active listings would have to rise by a further 108% from here to reach the inventory level of more than 232,000 that we had in February of 2008.

Back during the great financial crisis, when our inventory data series begins. Rising inventory is usually a sign that the advantage in the market is shifting away from sellers and more towards buyers. But there's a few other statistics that help us assess this as well. One is a month's supply of inventory, which we calculate as current active inventory divided by the 12 month average of closed sales. Some people like to divide inventory by just the most recent months number of closed sales, and that's perfectly fine to do.

But we like using the 12 month average of closed sales, because closed sales are a very seasonal statistic. By averaging the last 12 months of closed sales, we strip out that seasonality, which makes our month supply statistic easier to interpret from one month to the next.

For February, we reported about 5.3 months of supply for single family homes, which roughly means the existing inventory. At the end of February would be sold in 5.3 months at the 12 month rate of sales. There's an old rule of thumb that balanced markets that favor neither buyers nor sellers are typically found between 5 and 6 months of supply.

In truth, the level of month's supply where you'll find a balance varies from local market to local market. For example, in higher end, more luxury-oriented markets, the market will usually balance at a higher level than 5 to 6 months of supply. But anyway, we currently find ourselves within the 5 to 6 month band for a month's supply of single family home inventory at the statewide level, indicating we have moved out of seller's market territory and into relative balance.

Prices generally rise when sellers have more market power than buyers, and they typically fall when it's the buyers who have the edge. Because the Florida single family market is currently balanced, that means we can expect market prices to remain somewhat flat at the statewide level, at least on average. That kind of flatness and price growth is more or less what we've been seeing with the statewide median price for closed single family home sales in recent months.

In February, it was more of the same, with the median price remaining unchanged from a year ago at $415,000. One more statistic to keep an eye on over the next few months is how long homes are staying on the market before they go under contract and sell. The median time to contract for closed Florida single family home sales in February was 54 days.

That means roughly half of closed sales in February were properties that were on the market for 54 days or less before going under contract. In most years, this statistic peaks in February or March. It's very seasonal in nature, so we should only compare it to its value in February of previous years. Three years ago, in February of 2022, half of Florida's closed single family home sales were only on the market for a mind boggling 12 days or less, meaning that a huge share of homes that came onto the market back then were already under contract by the end of the month, and were therefore never even counted in the end of month inventory statistics.

That's why this chart somewhat parallels what you see in the active inventory chart. We showed you earlier. Compared to a year ago. Median time to contract for closed single family home sales was up by seven days, or about 15%. The average February value of this statistic during the pre-pandemic years of 2014 through 2019 was 58 days. So this February, we were actually below that level by four days, or about 7%.

But we remain substantially lower than where this statistic was back during the great financial crisis. We need to see an increase of about 169% in time on market from where we're at now, to reach the median level of 145 days we were at in February of 2008. That would mean the typical home would have to stay on the market about three months longer before going under contract than it would today.

Now that we've covered the single-family home market, let's quickly run through the same statistics for the condo and townhouse property type category. At the statewide level, this side of the market continues to be weaker than that of the single family home side of the market for multiple reasons, including, but not limited to, buyer concerns about condo reserve requirements, higher concentrations in some of the weaker markets in the state, and waning levels of interest from out of state buyers, as well as disproportionate economic impacts to buyers most sensitive to housing affordability.

Closed sales of condos and townhouses were down 13% year over year in February, a more substantial decrease than we saw in January when we were only down by 3.7%. New pending sales of condos and townhouses, meanwhile, were down almost 15% in February, so we're not likely to see much improvement in closed sales in the March statistics either. New listings of condos and townhouses were up by 6.7% year over year in January, but in February they were actually down by a half a percent.

Just keep in mind that in February, the level of new listings we had was still above what we're accustomed to in February of recent years. But if we generally follow along with what happened last year, in the coming months, we would expect perhaps new listings to move more in line with historical levels. As was the case for single family homes.

Condos and townhouses have been in a situation where new listings continue to outpace the number of properties either selling or moving off the market. But the disparity is stronger with this property type category, so we've seen more of a rise in inventory than we have for single family homes. Condo and townhouse inventory at the end of February was at about 75,000 active listings, up by 36% compared to a year ago and up by about 31.5% relative to the February average for the pre-pandemic year of 2014 through 2019.

Again, though, context is everything. Condo inventory would still have to increase by an additional 91% from here to reach the level of over 143,000 active condo and townhouse listings on the market as of the end of February 2008. We are a long way from that point. Still looking at month’s supply for condos and townhouses. It's pretty clear we are in a buyer's market, at least at the statewide level, with 9.7 months of supply, buyers have gained an advantage here, and sellers increasingly will have to concede on price if they want to move their properties.

There's plenty of evidence this has been happening over the last 7 to 8 months, including in February, when the median price for this category was down over 3% compared to a year ago, falling to $315,000. About half of the condos and townhouses that closed in February were on the market for 64 days or less, so that's about ten days longer than the typical single-family home sale.

It's about 18 days, or 39% longer than the typical time on market we observed one year ago. For this property type category. Still, it's only four more days, or 7% longer than the typical February time on market observed from 2014 through 2019, and it would have to increase from here by about 131% to match the level of 148 days recorded for February of 2008.

There continues to be a fair amount of differentiation and how inventory is trending at the local level across the state. So it's important you check in on your local market statistics instead of just going by the state level figures I've presented in this video. Florida Realtors® members can access the latest statistics on the interactive Sun Stats web application, and of course, the statewide statistics are available to everyone to see at floridarealtors.org.

Thanks as always for watching. We'll see you next month.