Florida housing market takes December hit, rebound projected for 2024

Florida home sale contracts fell in larger populace counties in Florida for March. Image via AP.

December brought a cooldown in the housing market in Florida with the end of the year and the onset of winter, but analysts project 2024 will bring a notable rebound.

The “Elliman Report” analyzed housing contract data for the largest home sale markets in Florida based upon data provided by real estate associations, brokers and other factors from the multiple listing systems.

“Newly signed contracts of single family and condos declined annually at a similar rate as new inventory,” the report concluded. “Monthly, new listings fell sharply at twice the rate of newly signed contracts.”

Still, high-priced housing did well in 2023. It was the one sector that saw few negatives.

“Despite the annual decline in newly signed contracts, single-families (homes) above the $1-million threshold surged year over year” in Florida, stated the report.

Jonathan Miller, author of the report and a market analyst based in New York City for Miller Samuel Inc., said interest rate hikes by the Federal Reserved knocked the housing market off balance in 2023.

“The market is still weaker than last year. That’s because mortgage rates are still higher. There is growth in the larger price points than the smaller price points” because higher valued homes draw buyers with more wealth, Miller said.

That translates to more wealthy prospects buying homes with cash, and that’s focused mainly on the higher end properties, he said.

In terms of contracts for home sales in December, every major metropolitan county in Florida saw declines on signed contracts in the last month of the year compared to the same time a year ago. Correspondingly, new listings for homes for sale in those counties fell “sharply” in those areas, including Broward, Collier, Duval, Hillsborough, Miami-Dade, Palm Beach, Pinellas and Palm Beach counties.

The biggest decline in single family home contracts signed in December compared to 2022 was seen in Palm Beach County, which saw 190 contracts signed last month. That’s a whopping 22.1% drop from the December 2022 figure.

Miami-Dade County sustained a drop-off in single-family home contracts in December but saw the least amount of damage, with a 4.9% drop in signed contracts, for a total of 520 last month.

Miller said the falloff on single-family home contracts in December is notable. But as mortgage rates fall in the coming months, the trend will reverse.

“We anticipate mortgage rates sliding. The rates have already declined almost a full percentage point in the second half of December. Rates were closing in on 8% (earlier in 2023) and now are just below 7%.”

He said there will likely be at least three Federal Reserve interest rate declines in 2024.

“That is expected to increase sales activity. … They’ve been negative for over a year because mortgage rates have nearly doubled, one of the steepest increases in more than two decades,” Miller said.

While St. Johns County in Northeast Florida is not one of the most populous counties in the state, it is home to one of the most rapidly expanding real estate markets in Florida. That county was also included in the report.

St. Johns County totally bucked the trend of falling signed single-family home contracts. St. Johns, where St. Augustine and Ponte Vedra Beach are located, saw a 15.5% increase in contracts, up to 201 total signed last month.

But even in St. Johns, the number of new single-family home sales listings dropped in December, falling by 28.9% to 165 last month, down from 232 from December 2022.

Miller said the Florida housing market is coming out of what was a shallow and relatively short sales valley following the interest rate increases over the past two years. He foresees a level and solid rebound.

“A year ago at this time, it was ‘a year of disappointment.’ From 2023 into 2024, it will be ‘the year of incremental change,’ where things are going to happen slowly. The housing market is going to see lower interest rates,” Miller said.

“We haven’t had this sea change in value like we did in the financial crises 15 years ago or so,” he added. “I think there will be more improvement in the market.”