Market Update
With Brad O’Connor Ph.D.
TRT: 3m54s
Video Transcription

Brad O'Connor directly address camera:  In December of last year, Florida was experiencing weak existing home sales growth and rising inventory levels driven in part by higher interest rates, a troubled stock market, and uneasiness generated by an impending shutdown of the federal government.
Well, what a difference a year makes! The newly released December 2019 statistics from Florida Realtors show that the market for existing homes in the Sunshine State ended the decade with a bang, experiencing significant year-over-year increases in sales and home prices in December.
Closed sales of existing single-family homes were up by nearly 24 percent compared to last December, while closings in the condo-townhouse category were up by almost 18 percent. These are eye-popping numbers, I know. So why such a big jump? Well, part of it is, as I already explained, sales were unusually weak at the end of 2018, driven in part by a sharp increase in the average 30-year mortgage rate.
Most years, we see a pop in statewide home sales each December as folks try to close before the end of the year, but last year there was no pop to speak of. In fact, single-family home closings in December 2018 were down about 10 percent compared to the previous year, and about 11-and-a-half percent in the condo-townhouse category. So part of what drove the huge year-over-year jump in closings for December 2019 is simply the fact that we're comparing it to a weak month for sales one year ago.
But this technicality doesn't explain this entire increase in sales - not by any stretch of the imagination. The average 30-year mortgage rate spent the entire second half of 2019 in the range of 3.5 to 3.8 percent, flirting with historical lows. And in the months since the mid-year yield curve scare that spooked the financial markets, the Fed has dropped the federal funds rate 3 times, restoring calm to the national economy. Here in Florida, we saw New Pending Sales for both property types begin surging in October, and now, with the December figures, we see a significant share of those deals successfully closed by year's end.
The news isn't all good, though, as inventory levels continued to trend downward in December. Active listings on the single-family home side of the market fell by about 11-and-a-half percent over the course of the year, while condo and townhouse inventory fell by almost 10 percent. The inventory shortage remains more severe on the single-family side of the market, where we have 3.4 months supply versus 5.2 months supply for condos and townhouses.
With this lack of supply, we continue to see home prices rise. The statewide median sale price for single family homes in December was $270,000, up about 6 percent compared to December 2018. In the condo and townhouse category, the median sale price was up even more, rising by over 8 percent to $200,000.
While many of the trends I've discussed here are statewide in nature, there are also many interesting trends to explore at the local level, so as always, I urge you to check out the statistics for your local market - many of which you can find at floridarealtors.org. And don't forget to attend our upcoming annual economic summit, Florida Real Estate Trends 2020! This highly-attended, free event will be held from 12:30 to 2:30pm on Thursday, January 23 at the Renaissance Orlando Hotel at SeaWorld. But get there early, as space is limited! I hope to see you there!