Florida housing markets cooling fastest as Northeast remains hot

According to a new study by Cotality, nationwide home prices were only 1.2 per cent higher in September compared to a year earlier, with prices actually falling 0.2 per cent month-over-month. 

This represents a dramatic slowdown from the rapid growth seen during the pandemic years.

Seven of the top ten coolest markets in the nation were located in Florida, including Cape Coral, Naples, Punta Gorda, and North Port. 

This cooling trend follows a construction boom during the pandemic that has led to an explosion in for-sale inventory across the state.

The inventory of homes for sale has risen to its highest level since 2019, as many potential buyers remain on the sidelines due to higher costs and growing economic uncertainty.

Cotality’s Chief Economist Dr Selma Hepp explained why Northeastern markets have remained stronger than other regions.

“Major Northeastern metro areas such as Boston, New York, and Philadelphia remain resilient thanks to sectors like finance, biotech, health care, and education,” Dr Hepp said.

She said that strong local job markets in these areas continue to attract high-earning professionals with the income stability needed to purchase expensive homes. 

Additionally, nearby mid-sized metros offer more affordable options for hybrid workers and high-income commuters.

In contrast, Florida’s struggling markets face unique challenges. 

The report highlighted that 20 per cent of the country’s 411 U.S. metropolitan areas experienced annual price drops in September. 

Meanwhile, the hottest markets were concentrated in the Northeast and Midwest, including Muskegon, Michigan; Parkersburg, West Virginia; and several cities in Indiana and Ohio.

For homeowners in cooling markets like Florida, the situation is particularly challenging as they face eroding equity while escrow costs continue to climb. 

According to Cotality, people are paying an average of 45 per cent more in escrow costs compared to five years ago.

Despite price corrections in some regions, affordability remains a significant challenge nationwide. 

Cotality’s report found that 75 per cent of the top 100 housing markets are still considered overvalued.