Gary and Karen Steppe listed a condo in Indialantic, Fla., in February for $294,900. They expected the two-bedroom vacation home, which is in an oceanside town near Melbourne Beach, to sell quickly. But the couple initially received no bids.
One reason: A rising number of homeowners in the area were also looking to sell. With more properties on the market, “buyers didn’t have that fear of missing out like they did when the inventory was less,” Gary Steppe said.
The Steppes cut the price, then accepted an offer in April for about $275,000. “I wish I had…sold it two years ago,” when similar condos were selling for higher prices, he said.
In most of the U.S., the limited number of homes for sale is pushing prices back toward record highs. Sale prices for single-family existing homes rose in 93% of U.S. metro areas during the first quarter, according to the National Association of Realtors. The median single-family existing-home price grew 5% from a year ago to $389,400.
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Yet the market is cooling and prices have started falling in some cities in Florida and Texas, where robust home-building activity in recent years has helped boost the number of homes for sale. The two states accounted for more than a quarter of all single-family residential building permits every year from 2019 to 2023, according to Census Bureau data.
In 10 Texas and Florida metro areas, the inventory of homes for sale in April exceeded typical prepandemic levels for this time of year, according to Realtor.com. In eight of those markets, pending sales in April fell from a year earlier.
In Florida and Texas, “we’re starting to get into a buyer’s market,” said Rick Palacios Jr., director of research at John Burns Research & Consulting.
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Only five of the 50 biggest markets posted year-over-year price declines in March, according to data provider Intercontinental Exchange, and four of them were in Texas or Florida: Austin, Texas; North Port, Fla.; Cape Coral, Fla.; and San Antonio.
The price declines in the Lone Star and Sunshine states are, for now at least, an outlier. But with the second- and third-largest populations in the U.S., respectively, the two states represent a significant amount of the national housing stock. They also signal that when supply ticks higher, momentum can shift to home buyers, even as mortgage rates above 7% are limiting the pool of buyers that can afford to purchase.
Recent national data suggests that more sellers are thinking about entering the market, as the crucial spring selling season reaches its peak period. More than two-thirds of consumers surveyed by Fannie Mae in April said it was a good time to sell a home, the highest level since July 2022.
Nationally, active listings in April were 36% below typical prepandemic levels, according to Realtor.com, as many homeowners with low rates on their current mortgages are reluctant to take on new loans at higher rates. News Corp, parent of the Journal, operates Realtor.com.
“Buyers do have a little bit more leverage” to negotiate lower prices this spring, said Lisa Sturtevant, chief economist at Bright MLS. But “we’re still pretty far from being a balanced market.”
Housing markets in Florida and Texas boomed early on during the pandemic, as remote workers sought out cheaper places to live and welcomed the states’ warmer climates and lack of state income tax. Even when rising mortgage rates started to slow the housing market’s momentum in 2022, Florida markets continued to post strong price growth.
Now, that big run-up is another reason why some home sellers in those states are slashing their asking prices. Ben Pfeiffer has cut the listing price on a six-bedroom house in San Antonio 16 times since putting it on the market in October. Some prospective buyers have reached out to ask if Pfeiffer would offer owner financing, so the buyer could buy the home from him over time instead of taking out a traditional mortgage, but he said he hopes to avoid doing that.
Due to mortgage rates, property tax and insurance costs and overall inflation, “your money doesn’t go as far to buy a house,” he said. “My expectation is that I’m going to keep lowering the price until I get a buyer.”
Write to Nicole Friedman at nicole.friedman@wsj.com
