Homes Are Taking Longer to Sell in US Markets That Once Flourished

A buildup of unsold houses sitting on the market for weeks is becoming a new reality in once-booming housing areas across the Sun Belt.

Real estate agents in the South and Southwest say they’re seeing more people list homes, giving up on hopes that mortgage rates will drop anytime soon. In Florida, homeowners are soaring insurance costs, and in Colorado, investors are culling rental properties.

The result is a rise in supply, something real estate agents who were getting multiple offers on even ho-hum houses not so long ago are not accustomed to. In Florida, houses now take a median 73 days to sell, up from 55 days two years ago and twice as long as in New Jersey and Virginia, according to Realtor.com data.

“In the big picture it’s not horrible, but compared to what everyone was used to, it feels like molasses,” said Michael Lauer, a broker in Florida’s Tampa Bay area. His business remains steady, but overall sales in his county have declined about 14% and the supply of homes for sale has more than doubled in two years.

A rise in the supply of homes 鈥� whether sold by owners or new 鈥� is generally a good thing in the US, where low inventories since the aftermath of the 2008 financial crisis have contributed to render many regions unaffordable for a majority of people.

An influx of people moving south during the pandemic and the lack of sellers willing to let go of cheap mortgages had exacerbated the issue and led to fierce bidding wars. Today, the supply of previously owned homes on the market nationally is still below 2019 levels, but nine states in the South and West now are above, Bloomberg Intelligence analyst Drew Reading said in a June 10 note.

Homebuilders who sped up production during the pandemic-era housing boom in the Sun Belt now are having to cut prices and offer steep price concessions to move excess homes.

Economists call the buildup of unsold houses in once-hot areas “normalization.”

“Inventories have been climbing, but they’ve been climbing out of a hole,” said Charlie Dougherty, a senior economist at Wells Fargo & Co.

For real estate professionals, that’s hardly reassuring. While US home prices are still higher than a year ago, they’re declining in cities like Dallas and Tampa, based on S&P CoreLogic Case-Shiller .

Fort Worth, Texas, near Dallas, is a seller’s market 鈥� for now, said Paul Epperley, president of the local Realtors association. Epperley sees some homeowners throwing in the towel on mortgage rates and listing their homes for sale. Nationwide, more than 70% of owners had mortgage rates below 5% in the first quarter, according to Redfin estimates, giving them little incentive to sell and buy elsewhere in a market with rates near 7%. However, a growing number have to move for jobs or family reasons and can’t wait any longer for borrowing costs to fall.

“They realize they’re not going to come back down to 2.8% in the foreseeable future,” Epperley said.

The number of new and existing homes on the market in Colorado rose 51% in May from last year, and it’s up 110% over two years, one of the biggest gains in the nation, according to Realtor.com data.

One contributing factor may be a of tenant-friendly laws recently passed in the state that has turned off landlords, according to Windy Bailey, president of the Pikes Peak Association of Realtors in Colorado Springs. She sees frustrated investors selling off their rental properties, contributing to the supply of homes on the market.

In fact, investors appear to be driving at least a small part of the inventory buildup in the US. Local real estate agents in cities including Atlanta, Dallas and Phoenix recently have been wondering if institutional investors are selling off properties, according to Lawrence Yun, chief economist of the National Association of Realtors. However, it’s hard to quantify to what extent it’s happening, Yun said.

Most of the sellers are mom-and-pop investors, said David Howard of the National Rental Home Council. By contrast, big institutional homeowners are buying fewer single-family rental homes, or SFRs, but aren’t yet selling them off.

“A lot of owners of SFRs are taking advantage of what is still a pretty good time to sell,” said Howard, who represents institutional owners.

In the Tampa Bay area, Lauer said spikes in flood and homeowners insurance are pushing people to sell lately. “Some people can afford it, but just don’t want to pay it,” he said.

And while beautiful homes in desirable areas are still selling, the salad days of a few years ago are over.

“Everything you listed had multiple offers immediately,” Lauer said. “That’s long gone.”

Chart: Sourced from Realtor.com.