Home prices are falling the fastest in these areas of Texas and Florida

While home prices are still rising across the US, driven by a persistent supply shortage, in the two states with the most new building permits in recent years – Florida and Texas – buyers are finally getting the upper hand.

A new report from Redfin found that five of the six metropolitan areas where home prices fell the fastest in February were in Florida and Texas. These included Austin, Texas; Tampa, Florida; San Antonio, Texas; Houston, Texas; and Jacksonville, Florida.

why is it important

Both Florida and Texas housing markets have boomed during the pandemic, as the rise of remote work has led to an influx of new residents moving in from out of state, drawn by sunny weather and a relatively cheap cost of living.

These new residents have boosted demand at a time when both states, like the rest of the country, have faced historic inventory shortages. Since then, both Florida and Texas have built more new homes than anywhere else in the union — but the situation is no longer the same as it was during the pandemic.

Immigration has slowed significantly, some workers have been forced to return to their home states, and many Floridians are being priced out by rising homeowners association (HOA) fees, property insurance premiums, and other housing costs. As a result, home prices are now falling in some of the hottest markets during the pandemic.

What you need to know

According to Redfin, these were the U.S. metro areas where the median home sales price fell the fastest in the country in February:

Austin, Texas: -2.7 percent year-over-year

Tampa, Florida: -1.9 percent year-over-year

San Antonio, Texas: -1.7 percent year-over-year

Houston, Texas: -1.5 percent year-over-year

Atlanta, Georgia: -1 percent year-over-year

Jacksonville, Florida: -0.8 percent year-over-year

For comparison, nationally, the median home sales price rose 3.2% in February compared to a year earlier, to $425,421.

The increase in inventory in many parts of Florida and Texas is making these markets favorable for buyers. This is especially true in the case of Texas; in Florida, homes for sale are piling up on the market as well as residents trying to offload properties they can no longer afford due to the increasing risk of natural disasters, rising HOA fees and home insurance premiums.

Florida and Texas were also the states where homes for sale took the longest to go under contract in the country, Redfin found. While the typical U.S. home sold after 54 days on the market, it took an average of 94 days for a home in Miami to go under contract — the longest of any major U.S. metro area.

This was followed by West Palm Beach, Florida, with 92 days; Austin, Texas, with 91 days; Fort Lauderdale, Florida, with 91 days; and Pittsburgh, with 85 days.

what people say

Connie Dornal, a Redfin Premier agent in the northern suburbs of Dallas, said in a statement: “There are about five times more sellers than buyers, meaning it’s a buyer’s market. That’s why I tell all my sellers it’s essential to price their homes competitively.”

Nadia Evangelou, the National Association of Realtors (NAR)’s chief economist and director of real estate research, previously said: “Higher inventory in Florida is good news for buyers because it provides more options and opportunities in a market that has been very competitive in recent years. However, it is important to put this increase in context. While inventory levels are now better than pre-pandemic lows, they are up from the pandemic lows. Meanwhile, demand in Florida remains very strong, driven primarily by population growth, new household formations and high levels of immigration to the state.

“As one of the fastest-growing states in the United States, Florida continues to see steady buyer interest, and this additional inventory is helping to balance the market. While home price increases have softened statewide, we continue to see strong appreciation in metro areas like Miami and Naples, where prices are up more than 7% in Miami and 10% more in Naples year-over-year.”

what happens next

Housing experts said many markets in Florida and Texas may already have turned in favor of buyers, although they may struggle to reap the benefits of these changes.

Stubbornly high mortgage rates, still hovering around 7% and expected to remain above 6% through 2025 and 2026, are making buyers nervous about purchasing properties – and forcing sellers to lower prices in an attempt to convince them to close the deal.

In addition, in Florida, other rising housing costs are making the decision to buy a home more difficult than it used to be. Experts, however, said the price declines are part of a “correction” of overheated markets and not signs of an impending crash.