Recent trends show housing prices falling in several US areas, despite a nationwide housing unaffordability crisis. This decline is linked to excess inventory and slowed demand in key markets.

Excess Housing Supply and Its Impact on Prices

As of recent reports, the US housing market is facing a significant challenge with a substantial excess of unsold homes. The most recent stats show home builders holding 113,000 unsold new units, a figure that's alarming but the highest since 2009. This increase in inventory is pivotal as it often correlates directly with a decline in housing prices. Economic principles dictate that as supply outstrips demand, it naturally leads to lower prices. In the current climate, this trend is being felt across various states as housing prices begin to dip.

Florida's Housing Market Cooling 

Florida's housing market, known for its rapid growth during the COVID-19 pandemic, is currently experiencing a notable slowdown. With developers having built extensively in anticipation of continued demand, they are now grappling with high inventory levels as new resident numbers dwindle. Nick Gurley, a housing analyst, highlighted three major issues confronting Florida's market: decreased migration, excess supply from builders, and affordability challenges for existing home buyers. These factors combined may see home values in regions like Tampa and St Petersburg experience drops of up to 10% in the next year.

Texas Housing Market: A Similar Scenario

Texas is following a parallel trend, with major cities like Austin and San Antonio witnessing declines in housing prices. The influx of newly permitted builds comes at a crucial time when demand appears to be leveling off. Analysts expect that with a fresh wave of housing inventory hitting the market in 2024, prices will continue to decline. Nick Gurley's observations suggest that Austin might be on the verge of bottoming out with prices currently sitting 12% overvalued from pre-dips, signaling a potential beneficial shift for prospective buyers looking for more affordable options.

Recent reports indicate a surprising downturn in housing prices across certain regions in the United States, which comes in stark contrast to the overall rising unaffordability problem that the nation is experiencing. According to a piece by Fast Company, October saw US home builders report 113,000 unsold new homes, the highest level since 2009. This scenario is particularly noteworthy given the pre-pandemic level of unsold homes stood at only 77,000 in October 2019. Experts suggest this excess supply is beginning to influence pricing, demonstrating the classic economic principle of supply and demand in action. In Florida, a once-booming housing market is experiencing a slowdown as a confluence of factors weighs heavily on home prices. The influx of new residents during the pandemic has slowed, leading to an oversupply of houses due to developers ramping up construction. Analyst Nick Gurley warns that Florida faces three significant challenges as it approaches 2025, including reduced migration, excess housing supply, and ongoing affordability issues tied to rising homeownership costs. Consequently, he anticipates home values in certain locales dropping by as much as 10% in the coming year. Texas is another state witnessing a similar trend, with cities like Austin and San Antonio experiencing a cooling of home prices. Following an impressive pipeline of new home and apartment constructions slated to roll out in 2024 and beyond, analysts predict an increase in market inventory, further driving down housing prices. This situation reveals the pressing need for more construction to adjust the market. According to Gurley, Austin may be the first market to reach its bottom, with current prices down 20% from their peak. While this presents challenges for homeowners in these markets, it also opens opportunities for potential buyers looking for affordable housing options.