Central Florida's Q1 2025 Housing Market: Trends, Rates, and Opportunities

As we kick off 2025, the Central Florida housing market is poised for an eventful first quarter, with shifting mortgage rates, evolving inventory trends, and a stabilizing market environment. Here's a closer look at what buyers and sellers may expect in the months ahead.

Mortgage Rates: A Potential for Decline?

After rising interest rates throughout 2023, many buyers and sellers held off on making moves, hoping for a drop. In December 2024, mortgage rates in Central Florida settled at 6.5%, down from 6.7% in November. Nationally, recent economic data has led to some optimism about further rate reductions. Experts predict mortgage rates could fluctuate between 7.25% and 5.75% this year, with the potential for lower rates depending on economic performance and Federal Reserve policy. The Fed’s cautious stance on rate hikes and a focus on improving mortgage spreads provide some hope that rates may trend downward, offering relief to buyers looking to enter the market.

Inventory Trends: A More Balanced Market

One of the most significant changes in Central Florida's real estate landscape is the shift toward a more balanced market. December 2024 saw a 28.2% year-over-year increase in inventory, with 10,049 homes available compared to 7,838 in December 2023. The months of supply dropped from 6.43 in November to 4.67 in December, indicating that while the market has stabilized, it still favors sellers slightly. This increase in inventory provides buyers with more options while maintaining healthy competition.

Home Prices: Moderate Growth Continues

Despite rising inventory, home prices in Central Florida continue their steady climb. The median home price in December 2024 reached an all-time high of $385,000, reflecting a 3.9% increase from 2023. The consistent appreciation suggests that demand remains strong, although price growth is slowing compared to previous years.

Nationally, home price growth is also cooling. In the latter half of 2024, 57% of appraisals came in higher than sale prices, indicating that while home values are still rising, the pace is decelerating. This trend may result in more accurate pricing and fewer surprises for buyers and sellers in the appraisal process.

Sales Activity: Cautious Optimism

While the total number of homes sold in 2024 declined by 7.1% compared to the previous year, December saw a promising rebound with an 8.7% increase in closed sales compared to December 2023. The trend suggests that buyers are becoming more comfortable with current interest rates and are re-entering the market.

Pending sales data indicates a steady start to the new year, but buyers should approach cautiously. While purchase applications rose 27% week-to-week nationally in early January, this growth follows a seasonal dip during the holidays and should be viewed with perspective.

Looking Ahead: Key Considerations for Q1 2025

• Buyers: With inventory levels rising and mortgage rates showing signs of stabilization, early 2025 may be an opportune time to enter the market before potential spring competition heats up.

• Sellers: Pricing homes competitively will be key as buyers have more options available. Setting realistic expectations based on recent market trends can help ensure a smoother selling process.

• Investors: The improved market balance provides opportunities to acquire properties with the potential for long-term appreciation as Central Florida continues to attract residents and businesses.

In conclusion, Central Florida’s housing market is entering 2025 with a sense of balance and opportunity. Whether you're looking to buy, sell, or invest, now is a great time to strategize and take advantage of the evolving market conditions. If you're considering a move, let’s connect to explore your options and make informed decisions in the months ahead.

Sources:

Orlando Regional REALTOR® Association State of the Market December 2024

HousingWire:
Mortgage rates fell last week. Can they go lower? Some Fed members are getting nervous about rates going too high January 18, 2025, By Logan Mohtashami
Home-price growth is cooling, leading to appraisal challenges, January 16, 2025, By Neil Pierson