Orlando’s red-hot real estate market may be cooling off.
The November real estate report from the Orlando Regional Realtor Association released Monday shows home sales are down and the supply of houses on the market is up as interest raise continue to increase.
Home sales fell 6.9% to during the month to 2,575 while the number of homes for sale grew to a 3.3-month supply, the biggest inventory since September 2017.
Real estate agents and analysts say increasing interest rates are giving buyers pause. The average interest rate for area homebuyers in November increased to 4.97%, up from 3.97% during the same month last year.
“There has been a shock in how quickly interest rates have gone up,” said Eric Soto, a real estate agent and co-owner of TC Orlando Homes based in Altamonte Springs.
It mirrors trends nationally, where both sales and price growth is slowing, according to the U.S. Census Bureau. The number of U.S. homes sold in October dropped 8.9% compared with a year ago, the agency’s most recent report said.
In Metro Orlando in November, the average price of a single-family home in the area increased to $251,000, up $1,100 from the month before. Rising average prices combined with slower sales are usually an indication of a decrease in sales of less-expensive homes.
But though there are more homes available, it’s still far from a buyers market, Soto said.
“There may be more homes than there were a few months ago but only a few hundred,” he said.
Several times in the past 18 months, the Federal Reserve has raised the key lending rate that helps determine the rate on 30-year fixed mortgages. Only recently have those policymakers indicated that they may hold off on more hikes.
Zillow economist Jeff Tucker said home supply is up in many markets across the country. But he, too, wouldn’t call it a huge increase.
“This is certainly not looking like an inventory spike,” he said. “It’s just coming up from really low levels.”
A five- or six- month supply of homes is a good equilibrium between buyers and sellers, Tucker said. Even at a 3.3-month supply, sellers still have control over the market, he said.
“It’s a bit of a breather for buyers, though,” Tucker said. “But there is a downside with interest rates rising.”
Tucker said rising interest rates may delay buyers from making purchases but doesn’t stop them completely.
What it may impact is affordability. Buyers can expect to pay about $148 more per month on a 30-year, fixed-rate mortgage with interest rates increasing from 3.97% to 4.97%, according to Bankrate.
Alex Vastardis, a Dr. Phillips area real estate agent with Coldwell Banker, said there was a slowdown in November, particularly for homes for less than $300,000. However, homes in Windermere, Dr. Phillips and Winter Garden are still in high demand. New homes are still selling well too, he said.
But since real estate decisions are often dictated by other factors such as new jobs or relocations, Vastardis said he still has a lot of customers coming into his office looking for new homes.
“December is usually a pretty positive month because people want to sell their homes or get into a new one before the end of the year,” Vastardis said.
Tribune Content Agency