America's Largest Homebuilder Issues Florida Warning
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D.R. Horton, the largest homebuilder in the U.S., has observed persistent weakness in the Florida housing market.
"There's been a lot of a change in the dynamic in the Florida markets. And perhaps most so there," Chief Operating Officer Michael Murray said during an earnings call last week. "Other markets continue to be consistent performers where there's been limited inventory and limited development of lots. And housing production continues to see strong demand in those markets."
This followed the company reporting a 10 percent year-over-year drop in net sales for its Southeast division in the third quarter.
Newsweek has contacted D.R. Horton via email for comment.
Why It Matters
With nearly nation-leading price drops, slowing sales and surging inventories, significant cracks have emerged in the Florida housing market this year. While many of these are issues facing the broader U.S. housing market, the Sunshine State has been pointed to as a particular area of concern, with one expert recently describing South Florida as the "epicenter of housing market weakness in the United States."
Homes in a neighborhood in Pembroke Pines, Florida, on January 26, 2023.
Homes in a neighborhood in Pembroke Pines, Florida, on January 26, 2023.What To Know
Florida saw a huge influx of new residents during the COVID-19 pandemic, becoming the top destination between January and June 2020 according to moving company HireAHelper.com. However, the state is now struggling with weak sales, ballooning inventory and a decline in home prices driven by the slowing demand.
According to real estate brokerage Redfin, Florida home prices fell by 2.2 percent year-over-year in June to a median price of $410,400. This is despite nationwide home prices rising by 1.0 percent over the same period. Additionally, the number of sold homes dropped 3.2 percent, while the median number of days on the market increased to 70 from 57.
Recent data from John Burns Research and Consulting (JBREC) found that Fort Myers, Lakeland, Naples, Jacksonville, Orlando, Sarasota, Tampa and West Palm Beach were areas that had experienced significantly weaker sales and declining prices as sellers struggle to get their homes off the market.
As well as economic concerns harbored by many Americans, the growing nationwide imbalance between sellers and buyers, and the decline in house prices facing many markets, have been attributed to high mortgage rates.
As a result, some believe that should rates drop to 6 percent, an additional 5.5 million households would be able to get on the property ladder. One expert told Newsweek that this could prove a "magic mortgage number that will push Americans to buy."
What People Are Saying
Chen Zhao, head of economics research at Redfin, told Bloomberg in June: "South Florida is the epicenter of housing market weakness in the United States. The question for the rest of the country is, will this spread? Florida is uniquely bad right now."
Real estate expert and 2025 Florida Realtors President Tim Weisheyer told Newsweek this month: "Florida's single-family home market is adjusting to a new normal. Elevated mortgage rates have made some buyers more cautious, and the surge of domestic in-migration we saw during the pandemic is leveling off."
What Happens Next
According to Redfin's forecasts, nationwide home prices are expected to decline by 1 percent by the end of the year compared to 2024. It anticipates that mortgage rates remaining largely unchanged at about 6.8 percent.
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