Two states in particular are experiencing a ballooning supply of homes for sale this spring, paired with modest price cuts to entice buyers.
A new report from Redfin indicates that housing supply is surging in Florida and Texas, and sellers are cutting their asking prices.
This is in part due to a surge in homebuilding in both southern states, which both saw an influx of new residents during the pandemic-era homebuying boom. But since that boom has fizzled out, there are now homes sitting on the market awaiting buyers.
“Out-of-town homebuyers no longer see Florida as a place to get amazing value,” Eric Auciello, a local Redfin sales manager, pointed out. “Now they’re moving to North Carolina or Tennessee to get a good deal. Many local blue-collar workers have been priced out of homeownership, too."
In a historical comparison, some Florida metros are faring better than others in this buyers' market.
“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,” Auciello explained. “Sarasota, in particular, has been overvalued for decades, and the chickens have finally come to roost. The Tampa metro has been faring a bit better.”
Texas is telling a similar tale these days, according to housing professionals there.
“Last year was by far the slowest market I’ve seen in my 20 years as a real estate agent,” said Connie Durnal, a Redfin Premier real estate agent in Dallas. “Move-up buyers are almost nonexistent. Even though a lot of homeowners have built up a ton of equity, many don’t want to sell because their monthly payment would double or triple due to high mortgage rates,” she added.
Among 85 major metropolitan areas across the U.S. that Redfin surveyed, the 10 posting the largest year-over-year increases in supply in March included six Florida metros and two in Texas.
Cape Coral saw the biggest jump in homes for sale (51%), followed by North Port-Sarasota (48%), Fort Lauderdale (30%), Tampa (29%), McAllen, Texas (25%), Orlando (23%), Knoxville, Tenn. (23%), Dallas (20%), West Palm Beach (20%) and Cincinnati (17%).
Of the 10 metro areas where sellers were most likely to cut their list prices, five are in Florida and two are in Texas. In North Port-Sarasota, 48% of listings had a price cut in March, representing the highest share nationwide. Next came Tampa (44%), Indianapolis (43%), Cape Coral (41%), Denver (37%), Orlando (35%), Portland, Ore. (34%), Houston (33%), San Antonio (33%) and Jacksonville (33%).
Builders are offering buyers concessions that are hard to refuse, analysts said, making it difficult for individual home sellers to attract buyers. The days of multiple offers in these locales are over, at least for the time being.
“The sharp ascent in Florida housing prices in recent years has driven a lot of homeowners to cash in on their equity, but some of them are having a hard time adjusting to the fact that it’s a buyer’s market,” Auciello said. “My advice to sellers is to price your home fairly; the comps from six months ago don’t exist now. And if you’re a buyer, know that the odds of getting an offer accepted below market value are pretty high."
This isn't the case in most other parts of America. New listings nationwide dropped 6% month over month in March -- the largest decline on a seasonally adjusted basis since January 2022. At the same time, prices have continued their ascent. The median U.S. home sale price rose 5% year over year in March to $420,357, just 3% below the record high of $432,496 set in May 2022.
