The Orlando housing market began 2025 with a significant increase in inventory and new listings, while sales declined, and home prices jumped year-over-year. With interest rates creeping up and more homes hitting the market, buyers have more choices, but affordability remains a challenge.

Massive Inventory Growth Puts Pressure on Sellers

One of the biggest shifts this January was inventory soaring to 11,697 homes, a 42.4% increase from a year ago and the highest level since July 2015. Compared to December 2024, inventory jumped 16.4%, indicating that more sellers are entering the market as the new year kicks off.

This surge in supply is due to a 68.1% month-over-month jump in new listings, reaching 4,220 homes in January. The growing inventory gives buyers more leverage, but it also means sellers must be strategic with pricing and home presentation to attract offers in a more competitive environment.

Sales Slow, But Prices Keep Rising

Despite the increased inventory, closed sales fell 11.9% from January 2024 and 29.7% from December, reflecting a slowdown in buyer demand. However, home prices continue to climb:

• Median home price: $375,000, up 4.2% year-over-year, but down slightly from $380,000 in December.
• Average home price: $492,645, up 17.4% year-over-year, suggesting higher-priced homes are selling at a faster rate.

While fewer homes are selling, the properties that do close are commanding higher prices, possibly due to move-up buyers and luxury market activity.

Mortgage Rates Tick Up, Extending Affordability Challenges

After trending downward in late 2023, mortgage rates rose to 6.8% in January, up from 6.5% in December. This slight increase could be dampening buyer enthusiasm, particularly for first-time buyers struggling with affordability.

Additionally, the months of supply surged to 7.73, up 61.6% from a year ago, signaling that Orlando may be shifting toward a buyer’s market in 2025.

Distressed Sales: A Minor Increase

Distressed property sales, including bank-owned and short-sale homes, rose slightly to 1.2% of total sales, a 5.9% increase from December. While not yet a significant market force, this could be an early sign of financial strain for some homeowners who purchased at higher rates in recent years.

What’s Next?

With rising inventory, sellers must adjust expectations and prepare for longer listing times. While home prices have remained strong, an extended oversupply could lead to more price reductions in the coming months.

For buyers, 2025 is presenting new opportunities. More options mean less competition, and while rates remain high, motivated sellers may be willing to negotiate.

Orlando’s housing market is entering a new phase, and whether it leans further into a buyer’s market will depend on interest rates, economic conditions, and local job growth in the months ahead.

* Source: Orlando Regional Realtor Association