Back To Blog

Sales and Prices Rise as Inventory Shrinks

  • By
  • Posted

rising-home-pricesPrices Rise as Inventory Shrinks

Rising prices and shrinking inventory couldn't cool home sales in Southwest Florida last month.

Sales of residential real estate in June maintained what could be another record-setting pace, with deals rivaling the numbers put up during the pre-recession boom, according to data released Wednesday.

"There hasn't been a string of four consecutive months with sales this high in the history of this region," said Stafford Starcher, president of the Realtor Association of Sarasota and Manatee. "The closest we've seen to these numbers was in the spring of 2004."

  • Buyers closed on 2,572 existing single-family homes and condominiums last month in Sarasota, Manatee and Charlotte counties, an increase of 334 units, or 15 percent, compared with June 2014.
  • Single-family home prices jumped 11 percent in Sarasota-Manatee to a median of $245,000, the Florida Realtors trade group reported.
  • Condo prices increased 3 percent to a median $179,000.

The stock of homes for sale has dropped sharply, putting pressure on prices and on buyers to make quicker decisions.

The supply of single-family homes for sale is down by 25 percent in Sarasota, to a mere 3.5 months, and by 19 percent in Manatee, to 3.7 months. A supply that would last six months is considered a balanced market.

Homes were on the market for a median of 43 days in Sarasota before selling, 12 days faster than last year.

"The existing inventory remains low in both counties, and that fundamental tends to push price appreciation in a desirable market like ours," Starcher said.

In Charlotte, home prices rose nearly 9 percent to a median $170,050, while condos were up 4 percent to $135,250.

Pending home sales were flat in Sarasota and down 9.5 percent in Manatee last month, reflecting the seasonal trend of fewer buyers during the summer.

Sales up 20 percent statewide

Statewide, sales of existing single-family homes increased 20 percent to a total of 27,729. The median sale price was $203,500, a 10 percent increase.

Condo sales totaled 10,991, a 15 percent gain for the year. Condos traded for a median $152,076, up 8 percent.

"With the continued growth in both sales and prices in Florida, it raises the question of whether the market is starting to overheat," said Florida Realtors chief economist John Tuccillo. "The decline in inventories to seller-market levels, and the decline in days on market, tend to suggest that possibility as well."

But he cites mitigating factors: much of the inventory pressure is in the lowest-price tiers, and the rise in condo sales and prices will be eased by an increased supply of newly built towers coming on the market.

"And finally, the Federal Reserve will soon be raising interest rates, which will have a dampening effect on demand," Tuccillo said.

Inventory in Florida now stands at 4.6 months for homes and 5.5 months for condos.

Nationwide, Americans bought homes in June at the fastest rate in over eight years, pushing prices to record highs as buyer demand has eclipsed the availability of houses on the market.

The National Association of Realtors reported sales of existing homes climbed 3.2 percent to a seasonally adjusted annual rate of 5.49 million, the highest rate since February 2007. Sales have jumped 9.6 percent over the past 12 months, while the number of listings has risen just 0.4 percent.

The median home price has climbed 6.5 percent over the past 12 months to $236,400, the highest level -- unadjusted for inflation -- reported by the Realtors.

Home-buying has recently surged as more buyers have flooded into the real estate market. Robust hiring over the past 21 months and an economic recovery now in its sixth year have enabled more Americans to set aside money for a down payment. But the rising demand has failed to draw more sellers into the market, limiting the availability of homes and sparking higher prices that could cap sales growth in the coming months.

"The recent pace can't be sustained, but it points clearly to upside potential," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Nationally, a 5 months' supply of homes was on the market in June, compared with 5.5 months a year ago.

Herald Tribune 7/24/2015