More people putting their homes on the market in Palm Beach County as interest rates drop

Article first appeared: https://www.palmbeachpost.com/story/news/local/2024/09/20/palm-beach-county-home-prices-increase-from-2023-but-not-record-breaking/75292220007/

A spike in the number of existing single-family homes for sale in Palm Beach County should dull price increases triggered by the Federal Reserve’s first interest rate cut since the pandemic, a leading Realtor said.

The lower rate approved Wednesday may lure homebuyers sidelined by high mortgage costs back into the market, which would increase competition and potentially drive up prices.

But with a 62% jump in months’ supply of inventory in August compared to the same time in 2023, and a 54% increase in active listings, Jeff Lichtenstein believes the market will remain stable.

“I’m reading articles, and everyone says everything is going to soar, but I don’t think so,” said Lichtenstein, who is president of Echo Fine Properties in Palm Beach Gardens. “If this cut happened a year ago, people would have rushed in because inventory was so low, but now there is more to absorb.”

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The Fed’s interest rate cut of half a percentage point on Wednesday preceded by one day the release of August home sale numbers by the Broward, Palm Beaches, and St. Lucie Realtors Group.

The quantity of Palm Beach County single-family homes that sold in August was down 11% from the same month last year, but the median price increased 2% to $617,500. The record high price was set in June at $659,999.

The number of homes newly listed for sale last month also increased by 8%.

While the 4.7 months’ supply in August of homes for sale was a 62% increase from last year, it’s still considered a seller’s market. A balanced market where neither the seller or buyer has the upper hand has between 5.5 and six months’ of inventory.

Palm Beach County’s condominium and townhome market has flipped to a buyer’s market with a 7.1 months’ supply of units for sale. That’s a 97% increase from last year. The number of active condominium listings was up 77% last month from 2023.

Lichtenstein said part of the increase in condominiums for sale is people trying to unload units ahead of potential pricey fixes triggered by new state laws that followed the 2021 Surfside condominium collapse.

“We’re being more picky about what listings we want,” Lichtenstein said about condominiums. “Is the seller logical? Are they going to price it right and listen to us? This is what we are asking.”

Condominium and townhome sales were down nearly 20% in August from last year. The median sales price was up 3.3% to $315,000.

Rates on a fixed 30-year mortgage dropped to 6.09% on Thursday, according to Freddie Mac. That’s the lowest rate since February 2023 but still double the rates from 2021. The dip came following expectations that the Federal Reserve would cut interest rates, which it did Wednesday.

Lawrence Yun, chief economist of the National Association of Realtors, said the Fed’s rate cut is the first of six to eight reductions he believes will occur through 2025 as inflation cools.

But Yun said upcoming mortgage interest rate reductions will be minimal.

“The Fed does not directly control mortgage rates, and the federal budget deficit is huge,” Yun said in a post on NAR’s website.  “Future Fed rate cuts are anticipated but will not be as impactful because large federal borrowing will leave less capital available for mortgage lending.”