Florida's Housing Market Still Feeling Impact of Coronavirus Outbreak in May

Florida's Realtors are reporting this week that the Sunshine State's housing market continued to reflect the economic impact of the coronavirus pandemic in May 2020.

The latest data from Florida Realtors show lower levels of closed sales and new listings compared to a year ago, median sales price increased and new pending sales for single-family existing homes rose 2.3% compared to a year ago - a positive sign for the housing sector, according to Florida Realtors Chief Economist Dr. Brad O'Connor.

"The most significant evidence we have of a rebound are the year-over-year changes we see for new pending sales in May," he said. "That 2.3% increase is in significant contrast to what we saw in April, when new pending sales were about 35% lower than the previous April."

In contrast, new pending sales of condos and townhouses last month fell by 16.8% compared to May 2019, but that's an improvement over the April figure. O'Connor added, "New pending condo and townhouse sales are clearly on a recovery trajectory right now, but are simply being surpassed by the more substantial recovery in single-family home new pending sales."

"As Florida's businesses and economy continue to reopen, it remains vital for all of us to follow the recommended health guidelines, practice social distancing and take the necessary precautions to safeguard each other and our communities," said 2020 Florida Realtors President Barry Grooms. "The pandemic has shown that having a place to call home is priceless - and all across the state, a buyer or seller can turn to a local Realtor for support, advice and expertise."

Last month's closed sales of single-family homes statewide dropped 36.2% year-over-year, totaling 19,622, while condo-townhouse sales declined 50.3%, for a total of 6,069. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

In May, the statewide median sales prices for both single-family homes and condo-townhouse properties rose year-over-year for 101 consecutive months. The statewide median sales price for single-family existing homes was $270,000, up 1.5% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month's statewide median price for condo-townhouse units was $201,472, up 3.3% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Chief Economist O'Connor noted that the drop in closed sales in May wasn't surprising, based on what the pending sales data in March and April showed. However, "the good news is that this is likely the worst of it for now," he said. "May's pending sales clearly show we're recovering, it's just that we won't see this recovery in closed sales until a month or two from now when these deals are finalized.

"Overall, housing demand continues to be driven by record-low mortgage rates that show no signs of rising significantly any time soon. June could be a very strong month for sales given the high levels of pent-up demand that has likely been released in recent weeks. Credit remains tight, but there is some evidence that it's loosened up a bit compared to where we were in April, as lenders have adjusted to the situation and incorporated new information about the performance of the economy. Lenders continue to face an enormous volume of applications, however, both for purchases and refinancings, which is affecting their ability to accommodate the demand we're seeing."

Ultimately, what happens next with the COVID-19 pandemic will affect the long-run outlook for housing in Florida and elsewhere in the U.S., O'Connor said.

"Most of the official economic forecasts from both public- and private-sector economists as of late bake in an assumption that there will not be a major resurgence of the virus this year, which means we should consider those figures cautiously," he said. "A large second wave of this pandemic is the greatest threat to the housing market and greater economy right now, so it's important that we all continue to do our part to limit the spread - especially as we continue to try to reopen the economy."

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.23% in May 2020, down from the 4.07% averaged during the same month a year earlier.