Palm Beach County, Fla., home sales plummeted in January to their lowest level since the Great Recession, a drop that reflected consumer concern about rising mortgage rates and an overall slowing in the real estate market.
Realtors reported just 846 sales of houses last month, marking the housing market's first sub-1,000 showing since January 2013. Sales of houses plunged 23% from January 2018 to January 2019, while closings for condos and townhouses fell 18%, according to the Realtors of the Palm Beaches and Greater Fort Lauderdale.
Volatile mortgage rates are one culprit. The average rate on a 30-year loan jumped to nearly 5% in November, although the typical
"The spike in interest rates just cooled the number of buyers off," said Henry Kaplan, sales manager at Century 21 Tenace Realty in Boynton Beach.
Now, Realtors say, buyers have more bargaining power -- and sellers are being forced to cut prices, host more open houses and generally try harder and wait longer to sell.
Terry Story, an agent at Keller Williams Realty in Boca Raton, said she recently persuaded a dozen of her clients to reduce their asking prices.
"They were overpriced," Story said. "A lot of sellers base their prices on what their neighbors were asking."
The median price of a Palm Beach County house sold last month was $340,000, up 5% from a year ago but below the $355,000 peak of last summer. The median condo price was $175,000, up 3% from a year ago, but also lower than the summertime apex of $190,000.
"Our prices have been unsustainable increases, and it needed to roll back a little bit," she said.
Palm Beach County wasn't the only housing market to see a slowdown in sales. Statewide sales fell, too, although Florida's 6% year-over-year decline was less dramatic than the drop in Palm Beach County.
"Next month I think will be better, if interest rates are really the driver," said Brad O'Connor, chief economist at the Florida Realtors. "We think there's plenty of demand."
Nationally, January's pace of 4.94 million annual sales was the lowest since November 2015.
"Existing-home sales in January were weak compared to historical norms," said Lawrence Yun, NAR's chief economist. "However, they are likely to have reached a cyclical low. Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months."
Yun often has noted that gains in home prices outpaced wage increases after the Great Recession. However, the soft housing market seems out of step with the rest of the economy, where unemployment is at rock-bottom rates and the stock market is near record highs.
"The economy has been good and people are making more money," Kaplan said. "Wages have crept up, and prices have crept down."
While that backdrop might mean there's no crash on the horizon, Kaplan predicted that sales will remain slow.
"This is the new normal, absolutely, and we need to get used to that," Kaplan said.
