Market Update April 2021
With Brad O’Connor
TRT 5minutes 35 seconds
Video Transcription

Brad O’Connor:  Another month is in the books for the 2021 Florida housing market, and the latest sales figures from Florida Realtors are looking about as strong as ever. That said, before we dive into the new numbers for April, we need to have a little discussion about how we measure trends in the real estate market. Let me explain.
The most common practice when analyzing monthly housing market data is to compare the latest month’s statistics to their previous values from the same month of the prior year. We usually do this by calculating the percent change from last year’s value to this year’s value. So, for instance, in March of this year, closed sales of single-family homes in Florida were up 23.3 percent year-over-year, meaning the number of sales in March of 2021 was over 23 percent greater than the number of sales in March of 2020. We prefer to quantify market trends in this way because it eliminates seasonal effects from the trend.
If we had instead looked at the one-month change in sales—that is, from February 2021 to March 2021—you would see that sales increased by 37 percent from month to month. But most of this increase was simply because there are *always* more sales in March than in February. Housing markets are seasonal, so this month-over-month number doesn’t really give us a sense of the overall trend in the market like the year-over-year percentage change does.
Be that as it may, sometimes we can run into problems when we use year-over-year figures, and over the next few months, that is unfortunately going to be the case for closed sales and a few other market metrics that were adversely impacted by the onset of the COVID-19 pandemic one year ago. As you can see from this chart, statewide closed sales of single-family homes took a big hit in April of 2020. Now, if we add in the sales data for 2021 so far, you’ll see that on a year-over-year basis, closed sales were up over 55 percent. That’s a big, huge, impressive number—but let’s face it, we’re not going to be seeing a longer-term trend of 55 percent annual growth in sales. When we get to June, we’re going to see our year-over-year growth figure shrink significantly because June of last year was the beginning of the recovery in sales.
One way we can get a better sense of the longer-term trend of sales growth is to instead compare our sales figure for this April to that of April *two* years ago, in 2019. As you can see in the chart, both 2018 and 2019 were relatively normal years for the housing market, so 2019 is a good base to start from. If you calculate the percent change of sales from April 2019 to 2021, you’ll find there was a two-year percentage increase of over 23 percent. That’s a little below the two-year percent change in sales of over 31 percent that we saw in March, so this suggests that the longer-term rate of sales growth actually slowed down a little bit in April.
That’s not really a very surprising finding, though. Most financed home sales that closed in April went under contract at a time when interest rates had risen compared to when March’s closed sales were going under contract. So this puts us on track for what most housing market forecasts indicate will be a long, gradual slowdown in the rate of sales. Mind you, we’re still *way* above the normal rate of sales growth, however, so this isn’t anything to be concerned about. In fact, in many ways, this is better for the long-term health and stability of the housing market.
Over in the condo and townhouse property type category, April was yet another impressive month for closed sales, as well. Sales were up almost 131 percent year-over-year, but compared to April 2019, they were only up about 47 percent. That’s right, *only* 47 percent. Still, that’s down from the nearly *60* percent two-year increase we saw in March. This property type category is still on fire, though, as prospective buyers continue to look more seriously at attached units in the face of shortages of single-family homes in the more affordable end of the price spectrum.
Median sale price is one statistic, fortunately, where we can still use year-over-year figures to look at the trends since median sale price did not fluctuate anywhere near as much as the number of closed sales in the early stages of the pandemic. The statewide median sale price for sales of single-family homes closing in April was over $336,000, a rise of 22.4 percent year-over-year. Over in the condo and townhouse category, the median sale price was an even $250,000, an increase of 19.6 percent compared to a year ago.
Now, in this video, I’ve covered the state as a whole, but every local market has its own trends to be aware of. So Realtors, be sure to check out sunstats.floridarealtors.org for interactive local market statistics, or visit our storehouse of local- and state-level market reports at floridarealtors.org/research. See you next month!