Halfway State of the Market

For you non-golfers, the halfway house is situated on the golf course to get a light lunch. It’s typically at the halfway mark in the middle of the round after the 9^th hole since there are only 9 holes left to go. Subsequently, you still have halfway to go, and a light lunch is best. Like a half a sandwich and a cup of coffee (some people put in half & half).

This week marks the halfway point in 2025. I touched on this a bit last week and now instead of meeting you halfway, I’ll do a deep dive as the May numbers just came out. I was interviewed by several outlets ranging from the Palm Beach Post to Market Watch regarding the state of the market but here is an extended version of what to expect from the second half of the year. And like my wife Veronica, my better half, it is good news for Buyers to grab some deals and Sellers in terms of properties turning. Here are 10 thoughts…

1. Statistics

Closed sales were down -11.7% in May 2025 at 2,291 homes sold versus 2,596 homes sold last year. The Treasure Coast was similar to Palm Beach County. It was worse as you go further south. Miami-Dade closed sales were off by -20.1% year over year. Some of the reasons Miami is worse off might be because it’s richer in condos which have had sales down more than single family homes because of the Surfside regulation issues. The closed sales were also lower in May because that’s when the tariffs were put in place and we saw a slowdown for about six weeks.

However, May also signaled that the tide has turned. New pending inventory is only off -5.9% in May versus down -9.6% in April. Pendings indicate future sales. It’s the number one statistic I’m paying attention to. On the ground at street level, we are seeing the number of homes going under contract speeding up and fully expect June numbers to be cut even more.

2. Sellers Dealing

Sellers will make a deal with you over the next six months. Maybe meet you more than halfway! The primary motivation is they don’t want to hold the house over the next six months. Many “Must Sellers” have added up their cost of carry and lost opportunity cost (proceeds from sale tied up in house to invest”). The “I own it outright and am not going to give it away” crowd even is acutely aware that typing up a sale is costing real dollars. The medium selling price off original list price in May was down -1.8% at 92.2% versus the original list price last May of 93.9%. This doesn’t mean every home is 7.8% off original list. If a home is remodeled and has the right ingredients, we are still seeing multiple offers.

3. Offseason & Hope

The beauty of the offseason as a Buyer is that you have less people and competition. One has time to cut a deal and to shop. Once January hits, you are competing with the seasonal renters who come down on January 1 and the snowbirds. The first quarter is free for all. Sellers also start to get “Hope” once they see that January is coming. The moment that hope comes into play, many are less likely to negotiate as much.

4. Prices have already dropped

There are already good deals out there now and many Sellers are putting their home on at realistic prices or have already dropped to a realistic price.

5. Inventory available

Active Inventory is up 24.1% with Months of Inventory at 7.7 months available. Today there are 14,670 units versus 11,825 units from last May. Instead of getting 85% of what you want, you might get up to 100% of what you want. Whereas in the pandemic, inventory in your choice neighborhood wasn’t even available.

6. Inflation

Your home right now is a depreciating asset. Core inflation rose to 2.7% this week. Resales are not going up in price at that same rate as each of those 14,670 homes on the market is an individual owner. That means unlike bananas or automobiles that are seeing prices go up and factoring in tariff cost or extra labor costs – resales become a value. Over time as inventory diminishes, that could go the opposite way.

7. New Construction Prices

New construction will have to peg extra costs of goods related to tariffs and extra labor costs from having less of a worker pool. Expect less spec homes to hit the market and eventually the cost of new construction to rise. While some builders are discounting now their costs will have to be passed along to you. This should create a gap between resales and new builds, giving resales the ability to increase in price at some point.

8. Condos

The condo story is way past the halfway mark of bottom. There was an extension from last year for condos to comply with doing mitigation studies and having proper reserves. We are coming to the end of condos not selling. With a boatload of inventory and Buyers having proper cost certainly, expect 2026 to be the year condos start to move.

9. Interest Rates

This is a double edged sword, but the caveat of refinancing wins out as I’ll explain. The executive branch wants interest rates lowered as does every executive branch. Jerome Powell’s term ends during 2026 and there is already talk of a shadow chairman. At some point interest rates will probably be forced down. If that occurs, the advantage cash buyers have now will dissipate because of more competition. And if you are getting a mortgage now, prices of homes would then jump taking out the advantage of a rate decrease. Remember, if you are getting a mortgage, you can always refinance but you can’t lower what you paid on your home purchase in the past.

10. Taxes

Some places like New York City are looking at a big tax increase in order to pay for certain programs. My guess is Florida might will see movement from people in higher tax brackets and businesses looking to relocate to Florida. This means more buyers and higher prices in the future.

If you’re up North and are going to buy next season, give some serious though to coming down during the summer and fall. There still will be inventory once the season hits but the best time to purchase might be in the offseason. And if you are coming from New York, why settle for all those higher costs and just have half a slice out of a big apple. Especially, when you can have all of paradise in Florida!