Florida Consumer Sentiment Drops in February

 Floridians’ opinions about current economic conditions were mixed. Their views of future economic conditions are more pessimistic, a UF analysis found.

GAINESVILLE, Fla. — After three consecutive months of increases following the presidential election, consumer sentiment among Floridians dropped 2.6 points in February, down from a revised figure of 86.9 in January. National sentiment stands out with a sharp decline of seven points.

“The decline in consumer sentiment is primarily driven by Floridians’ pessimistic expectations about future economic outlooks, which have decreased for the second consecutive month. In particular, expectations for the U.S. economy dropped sharply, nearly reversing the gains seen since the presidential election in November,” said Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.

“Several factors are contributing to this growing pessimism, with the potential impact of tariffs likely at the top of the list, particularly through their effect on prices. This has led to higher inflation expectations. While tariffs on Canada and Mexico were postponed in February, they are now expected to take effect in March. Tariffs on China were imposed in February, and further increases are under consideration. Additionally, inflation remains above the Fed’s target, delaying any prospects of interest rate cuts in the near future,” Sandoval added.

Among the five components that make up the index, four decreased and one increased. Floridians’ opinions about current economic conditions were mixed. Opinions of personal financial situations now compared with a year ago increased 5.5 points, rising from 62.6 to 68.1. These views were shared broadly across sociodemographic groups and were particularly strong among men and people aged 60 and over. In contrast, opinions on whether now is a good time to buy a major household item, such as an appliance, decreased slightly three-tenths of a point from 77.9 to 77.6. However, these views varied across sociodemographic groups, with men, people younger than 60, and people with an annual income above $50,000 expressing more favorable opinions.

Floridians’ views of future economic conditions in February forecast a pessimistic outlook, as all three components deteriorated substantially. Expectations of personal financial situations a year from now declined 3.9 points from 102.2 to 98.3. These negative views were shared by Floridians across sociodemographic groups, except for people with an annual income under $50,000, whose reading showed slightly more optimistic expectations. Outlooks of U.S. economic conditions over the next year experienced the steepest decline, plummeting 8.6 points from 96.5 to 87.9. Additionally, expectations of U.S. economic conditions over the next five years fell 5.8 points from 95.1to 89.3. Notably, these downward trends were observed across all sociodemographic groups.

“Federal civilian employment in Florida totals nearly one hundred thousand workers, but it is unclear how many will be affected by the recent layoffs. While the overall job market remains solid, job and wage losses among federal government employees could reduce demand and consumption, potentially affecting Florida businesses. Ultimately, the economic impact will depend on the scale of the job cuts and the ripple effect on contractors and consumer spending,” said Sandoval.

“Looking ahead, we anticipate a decline in consumer sentiment, driven by the potential for new tariffs and ongoing workforce reductions resulting from federal government layoffs. Consumer sentiment in March will offer further insight into whether this shift points to a longer-term downward trend in the months ahead,” said Sandoval.

Conducted Jan. 1 to Feb. 27, the UF study reflects the responses of 279 individuals who were reached on cellphones and 271 individuals reached through an online panel, a total of 550 individuals, representing a demographic cross section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a two, the highest is 150.

Source: University of Florida

© 2025 Florida Realtors®

Understanding Florida's Transaction Broker Role

By Richard Swank

Florida law presumes brokers as transaction brokers unless a disclosure is made. This role allows limited representation, no fiduciary duty and limited confidentiality.

ORLANDO, Fla. — Florida law states that unless a residential real estate broker provides a single agent or no brokerage relationship disclosure to their customer, the broker is presumed to be a transaction broker. But what does that mean?

Transaction broker is defined in Section 475.01(1)(l), Florida Statutes. A transaction broker can represent a seller, a buyer or both in a real estate transaction but does not represent either in a fiduciary capacity. Accordingly, the seller and the buyer give up their rights to undivided loyalty from the licensee. The limited representation allows the licensee to facilitate the transaction, but the licensee cannot work to the detriment of one party over the other if representing both.

Section 475.278(2), Florida Statutes, sets forth the duties of a transaction broker. A transaction broker must deal honestly and fairly, account for all funds, use skill, care, and diligence and disclose latent defects. In addition, a transaction broker must present all offers and counteroffers in a timely manner, unless their customer has instructed otherwise in writing. 

Finally, a transaction broker has the duty of limited confidentiality. The limits in the statute include disclosing that a party will pay more or accept less than presented in the listing or offers, a party’s motivation, private details of financing and anything else the customer asks the broker to keep confidential.

When reviewing these duties, it’s important to note that some of them, such as the duty of dealing honestly and fairly and the duty of disclosing latent defects, are universal to all three of Florida’s brokerage relationships. Where a transaction broker differs from, for example, a single agent, is that the transaction broker doesn’t have a duty of loyalty and only a limited duty of confidentiality.

Some brokers ask, “I’m a transaction broker. Doesn’t that mean I represent the transaction?” As you can see from the statutory definition and duties, that answer is no.  A transaction broker represents either or both of the parties, but the broker does not represent the transaction. If the broker is representing both parties, the broker facilitates the transaction but does not represent it.

Though the nuances of transaction broker practice can be tricky, ultimately it provides a great deal of flexibility to a real estate broker. If the broker identifies a buyer, the broker can represent that buyer in the same transaction without additional disclosure paperwork. Transaction brokers should be mindful of complying with Article 7 of the National Association of Realtors®’ Code of Ethics, which requires disclosure and consent if the broker is receiving compensation from more than one party. But the representation of both parties in a transaction is presumed to be permitted as a transaction broker.

Finally, one word of caution: When representing themselves in a transaction, a broker cannot be a transaction broker. Almost by definition, a person will always have their own best interests at heart when buying or selling their own property. The presumption of being a transaction broker should not mislead a broker into forming a relationship with the other party and its inherent conflicts of interest.

Richard Swank is an Associate General Counsel for Florida Realtors.

Note: Information deemed accurate on date of publication.

© 2025 Florida Realtors® 

January U.S. New Home Sales Fall

 By Amy Connolly

New home sales dropped 10.5% in January as high mortgage rates, affordability issues and severe winter weather kept buyers on the sidelines.

WASHINGTON — New homes sales fell in January as mortgage rates remain high and affordability keeps buyers on the sidelines, according to data from the U.S. Commerce Department's Census Bureau.

Sales of single-family homes fell 10.5% in January from December to a seasonally adjusted annual pace of 657,000 units. The January sales were down 1.1% from a year earlier.  

The median sales price of a newly built home in January was 2025 was $446,300. The average sales price was $510,000.

Economists said frigid temperatures in January across the country also played a role in the decline.

"The large fall in new home sales in January was to be expected given the disruption from the unseasonably severe winter weather," Bradley Saunders, the North America economist for Capital Economics, told Realtor.com.

© 2025 Florida Realtors®

Typical Buyer’s Down Payment is 16%

Redfin: The typical U.S. homebuyer now puts down roughly $63,000, about $4,000 more than last year, because of a jump in home prices.

SEATTLE — The typical U.S. homebuyer’s down payment was equal to 16.3% of the purchase price in December, up from 15% a year earlier, according to a new report from the real estate brokerage Redfin. In dollar terms, the typical homebuyer’s down payment was $63,188. That’s up 7.5% from a year earlier, the biggest increase in five months.

The data in Redfin’s report is from the company’s analysis of county records across 40 of the most populous U.S. metropolitan areas. December 2024 is the most recent month for which data is available.

The amount of money homebuyers are putting down is higher than a year ago mainly because home prices are up: A higher price means buyers typically make a bigger deposit. The median U.S. home-sale price rose 6.3% year over year in December, to roughly $428,000.

The percentage buyers are putting down is relatively high because mortgage rates are elevated near 7%, and some buyers are putting down more up front to bring down their monthly interest payments.

Down payments are no longer seeing the wild swings they were during the pandemic. The median U.S. down payment rose from the 10% range before the pandemic to the 15% range in 2021, which was the height of the pandemic homebuying frenzy. Mortgage rates also drove that increase, but the dynamics were very different then: Record-low rates of under 3% were fueling intense bidding wars among homebuyers, which motivated many to put more money down to make their offers stand out in a competitive environment.

“While a larger down payment can lower monthly mortgage payments and help strengthen an offer in a bidding war, bigger isn’t always better,” said Sheharyar Bokhari, a senior economist at Redfin. “Housing markets in much of the country have started tilting in buyers’ favor, allowing buyers to set the terms they want. That means house hunters don’t necessarily need to break the bank for a huge down payment if it makes more financial sense to save some money for things like future home renovations or other investments.”

Fewer homebuyers pay in cash

Roughly three in 10 (30.6%) U.S. homes were bought with cash in December. That’s down from 33.8% a year earlier, but up from September’s three-year low of 28.6%.

The share of buyers paying with cash peaked in 2023 because that’s when mortgage rates peaked, hitting a two-decade high of nearly 8%. Buyers who can afford to pay with cash are more inclined to do so when rates are high because they’re avoiding high monthly interest payments, and saving money in the long run.

Mortgage rates have since come down slightly and evened out in the 6% to 7% range, bringing down the share of buyers who are paying in all cash. Additionally, investors–who make up a big share of all-cash buyers–are purchasing fewer homes.

On an annual basis, 32.6% of 2024’s home sales were made with cash, the lowest share in three years.

Little change in FHA loan use

Roughly one of every seven (15%) mortgaged home sales used an FHA loan in December, down slightly from 15.9% a year earlier but up from mid-2022’s decade-low of roughly 10%.

The share of mortgaged home sales using a VA loan rose to 6.7%, from 6.2% a year earlier.

More homebuyers are using FHA loans now than in late 2021 and early 2022, when the ultra-competitive environment favored buyers with higher down payments and more ability to prove their financial security. Now, buyers are more likely to get an offer using an FHA loan accepted. Additionally, higher home prices mean more buyers find it hard to afford large down payments, making FHA loans more popular.

Conventional loans are by far the most common type of mortgage. Nearly four in five (78.4%) borrowers used a conventional loan in December, little changed from 77.9% a year earlier.

Metro-level highlights

The data below is from December 2024, the most recent month for which data is available, and covers 40 of the most populous U.S. metros.

Down payments

• Down-payment percentages were highest in San Francisco, where the typical homebuyer put down 26.4% of the purchase price. It’s followed by two other California metros: Anaheim and San Jose, at 25% apiece.
• They were lowest in Virginia Beach, VA (3%), Detroit (6.5%) and Baltimore (8.5%).

FHA loans

• FHA loans were most prevalent in Riverside, CA, where 25.4% of mortgaged home sales used one. Next come Providence, RI (25.1%) and Las Vegas (24.3%).
• They were least prevalent in California: San Francisco (2.1%), San Jose (2.2%) and Anaheim (5%).

VA loans

• VA loans were most prevalent in Virginia Beach, VA (39%), Jacksonville (16.3%) and Washington, D.C. (14.3%). Those metros all have a large military presence.
• They were least prevalent in the Bay Area: San Jose (less than 1%), San Francisco (1.5%) and Oakland (1.8%).

All cash

• All-cash home purchases were most prevalent in West Palm Beach, FL, where more than half (50.4%) of homes were bought in cash. Next came Cleveland (46%) and Jacksonville (39.3%).
• They were least prevalent in Oakland (16.2%), San Jose (17.8%) and Seattle (18.8%).

Source: Redfin

© 2025 Florida Realtors®

FHFA: U.S. House Prices Rose 4.5% in 2024

 Most states and metro areas saw home price growth last year. Prices increased more in areas with tighter inventory.

WASHINGTON – U.S. house prices rose 4.5% between the fourth quarter of 2023 and the fourth quarter of 2024, according to the Federal Housing Finance Agency House Price Index (FHFA HPI). House prices were up 1.4% compared to the third quarter of 2024. FHFA’s seasonally adjusted monthly index for December was up 0.4% from November.

“U.S. house prices grew at a slightly higher rate in the fourth quarter after three straight previous quarters of weaker appreciation,” said Dr. Anju Vajja, deputy director for FHFA’s Division of Research and Statistics. “The price growth accelerated during the quarter as the inventory of homes for sale tightened even further.”

Significant findings

Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.

• House prices rose in 49 states between the fourth quarter of 2023 and the fourth quarter of 2024. The five states with the highest annual appreciation were 1) Connecticut, 8.3%; 2) New Jersey, 8.3%; 3) Wyoming, 8.3%; 4) Vermont, 8.1%; and 5) Rhode Island, 7.6%. House prices declined in Mississippi by 0.2%.
• House prices rose in 92 of the 100 largest metropolitan areas over the previous four quarters.  The annual price increase was the greatest in urban Honolulu, HI at 18.7%. The metropolitan area that experienced the most significant price decline was Cape Coral-Fort Myers, FL at 6.3%.
• All nine census divisions had positive house price changes year-over-year. The Middle Atlantic division recorded the strongest appreciation, posting a 7.1% increase from the fourth quarter of 2023 to the fourth quarter of 2024. The West South Central division recorded the smallest four-quarter appreciation, at 2.3%.

The FHFA HPI is a comprehensive collection of publicly available house price indexes that measure changes in single-family home values based on data that extend back to the mid-1970s from all 50 states and over 400 American cities. It incorporates tens of millions of home sales and offers insights about house price changes at the national, census division, state, metro area, county, ZIP code and census tract levels. FHFA uses a fully transparent methodology based upon a weighted, repeat-sales statistical technique to analyze house price transaction data.

Source: Federal Housing Finance Agency

© 2025 Florida Realtors®

Meet the AI Revolution for Luxury Homes

 The latest smart home technology offers greater personalization, advanced automation and seamless integration across every part of a home.

NEW YORK – When selling a luxury home, forget asking Alexa or Google turn on the lights. Those systems are flip phones compared to the newest smart-home tech. The most advanced generation of smart home technology is powered by more advanced AI, turning luxury properties into uber-smart homes.

AI-driven systems like Josh.ai and Crestron are changing what’s possible, offering greater personalization, advanced automation, and seamless integration across every part of a home.

Luxury buyers expect more than convenience. They can now purchase homes that anticipate their needs. Here’s a look at the hottest smart home tech for affluent buyers and how it can help elevate your luxury listings.

Beyond voice commands: AI-powered home control

New technology is moving beyond the role of simple voice assistants to AI-powered home control systems that learn independently and adapt.

Josh.ai understands natural language and adapts to user behavior over time. If a homeowner dims the lights at sunset, plays jazz in the evening, and turns on the fireplace, Josh.ai picks up on the pattern and does it automatically. It’s also privacy-focused: it keeps your data secure without selling your personal information.

Crestron’s home automation system connects lighting, security, climate, and video and audio systems, removing the need for multiple apps or remotes.

These systems don’t just follow commands, they anticipate them, creating a genuinely intuitive home experience.

AI-driven security and biometric access

Security isn’t just about keeping a home safe. For high-end buyers, it’s about convenience and control. AI-powered security systems are eliminating passwords, codes, and keys.

Face-recognition door access systems from Swiftlane or Lockly let homeowners open locked doors with a glance. The most advanced models offer adjustable access levels – time restrictions or temporary access that expires – based on who’s at the door.

AI-enhanced security cameras like Deep Sentinel pair AI with human intervention to analyze behavior instead of just detecting motion; it filters out false alarms – like blowing leaves or animals in your yard – and detects real threats.

These features streamline security while adding sophistication, giving buyers peace of mind without any extra effort.

Smarter windows and climate control

Luxury homes are embracing AI for effortless energy efficiency and climate comfort.

Smart glass like View Smart Windows tints automatically based on light levels, keeping spaces comfortable without blinds or shades. 

AI-driven climate control systems like the Nest thermostat that learns from your behavior can be paired with Flair Smart Vents to intelligently redirect airflow to improve room temperature consistency throughout the home.

The Ecobee Smart Thermostat with voice control also features a hands-free calling intercom. Crestron’s Horizon smart thermostats, which integrate with Josh.ai and multi-zone heating and cooling systems, adjust the temperature based on room occupancy, outdoor weather, and personal preferences.

Buyers looking for a high-tech, energy-conscious home will see these features as both practical and luxurious.

AI-powered kitchens and home automation

Luxury kitchens are getting a serious upgrade with AI-powered appliances that make daily life easier.

Miele’s Dialog Oven scans food and adjusts temperature and cooking time in real-time, guaranteeing perfect results. This new tech delivers new cooking methods, such as “cooking a fish in ice or veal tenderloin in beeswax without melting ice or wax.”

LG’s InstaView fridge with AI Vision automatically recognizes “stored food items, suggesting recipes based on available ingredients and user preferences, and tracking inventory and expiration date.”

Wellness and entertainment go high-tech

Many luxury homebuyers will be attracted by a smart home that can also enhance their well-being.

Smart circadian lighting like Ketra works with Lutron lighting controls and shade, changing throughout the day to mimic natural sunlight and improve mood and sleep.

AI-powered home theaters, like the one from Control4, automatically adjust the picture and sound quality, delivering the perfect movie experience.

For buyers who value wellness and entertainment, these features make a home feel both cutting-edge and comfortable.

A word of caution

Even the smartest home is only as reliable as its power and internet connections. When one is down, so is the tech. Luxury buyers investing in these advanced AI-enabled home systems should consider backup solutions to keep systems up and running. A whole-home generator ensures uninterrupted power during outages, while satellite internet services like Starlink provide connectivity even if the local network options go down.

Why smart home technology matters to you as an agent

Smart home technology is moving well beyond simple automation: it’s now adaptive, predictive, and intuitive. Luxury buyers expect smart homes that feature the latest tech. Explaining how these innovations enhance security, energy efficiency, entertainment, and daily life helps you market high-tech homes more effectively. It also lets you connect better with affluent buyers by winning their trust as their advisor and local expert. Because when buyers see a home that thinks for itself, they’re more likely to see the added value.

Source: Tech Helpline

© 2025 Florida Realtors®

Flashback to 1995 in the Housing Market vs Today

 By Jessica Lautz

At 4.06 million, the annual pace of 2024’s existing-home sales was the lowest number recorded since 1995, when it was 3.85 million.

WASHINGTON — If one reminisces about 1995, one may remember their real estate office equipped with Windows 95. Fax machines were a staple in business communication, but electronic mail was slowly emerging as more common. VHS tapes were the most popular way to watch a movie, and CDs were becoming more common, replacing cassette tapes. Just 2% of home buyers looked for homes online in 1995 – compared to 100% last year.

So why the comparisons to 1995? At 4.06 million, the annual pace of 2024’s existing-home sales was the lowest number recorded since 1995, when it was 3.85 million. But, as clearly noted, the world was in a much different place. This blog post dives into the nearly 30-year comparison to see the changes and difficulties buyers faced last year.

In 1995, the population of the U.S. was 266.6 million, while in 2024, the population was 341.1 million —a difference of 74.5 million people. The reasons for the lower home sales figures are illuminated when looking at both housing inventory and affordability. In December 1995, 1.58 million single-family homes were available to purchase compared to December 2024, with just 1.00 million single-family homes. The months’ supply in 1995 was 4.8 months compared to just 3.7 months in 2024. While there has been an improvement in housing inventory since 2023, when the month’s supply was just 3.1 and the December single-family inventory was under 900,000, there is a long way to go to meet the current population demand.

The second major hurdle is housing affordability. For the median home sales price in 1995, it was $114,600 ($241,000 inflation adjusted). The median sales price in 2024 hit a new historical high of $407,500. This is good news for homeowners and potential repeat buyers as they earn housing equity — but creates difficulties for new first-time buyers. In 1995, mortgage interest rates averaged 7.93%. In 2024, mortgage interest rates averaged 6.72%.

Looking at sales prices and mortgage rates is helpful in the context of overall housing affordability and how far one’s income can go when purchasing a home. To make comparisons of the latest data available, in November 1995, the NAR Housing Affordability Index was 126.9 (above 100 is more affordable), the qualifying income to purchase a home was $32,112 (the same buying power as $65,957 in November 2024), and the mortgage payment as a percent of one’s income would be 19.6%. These factors have changed dramatically with limited housing inventory and the rise in home prices. In November 2024, the housing affordability index was 99.0, the qualifying income to purchase a home was $103,824, and the mortgage payment as a percent of one’s income would be 25.2%.

Given these measures of housing affordability and inventory, one should not be surprised that those who were able to purchase a home in 1995 are markedly different from those today. The 1995 Profile of Home Buyers and Sellers shows that 42% of home buyers were first-time buyers. In 2024, the share dropped to a historic low of 24%. First-time buyers were younger at just 31 years old compared to 38 years old today. Buyers today have to save for longer periods while paying for debt that was not as common in 1995 — i.e., student loans.

The headwinds for the 2024 housing market were severe, but 2025 is already showing signs of encouragement. Home sales activity for the end of 2024 showed rapid signs of improvement. Interest rates are lower than one year ago, and the market has added inventory.

© 2025 National Association of Realtors® (NAR)

U.S. Pending Home Sales Fell 5.5% in December

 All four U.S. regions saw month-over-month transaction losses, NAR’s chief economist said. 

WASHINGTON — Pending home sales retracted 5.5% in December – following four consecutive months of increases – according to the National Association of Realtors®. All four U.S. regions experienced month-over-month losses in transactions, with the most significant fall in the West. Year-over-year, contract signings reduced in all four U.S. regions, with the Midwest seeing the largest decrease.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – slid 5.5% to 74.2 in December. Year-over-year, pending transactions declined 5.0%. Last year’s cyclical low point occurred in July 2024 at 70.2. An index of 100 is equal to the level of contract activity in 2001.

“After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising,” said NAR Chief Economist Lawrence Yun. “Economic data never moves in a straight line. High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions.”

Pending Home Sales regional breakdown

The Northeast PHSI fell 8.1% from last month to 62.3, down 1.3% from December 2023. The Midwest index shrunk 4.9% to 74.3 in December, down 6.9% from the previous year.

The South PHSI slipped 2.7% to 90.6 in December, down 5.1% from a year ago. The West index tumbled by 10.3% from the prior month to 57.7, down 5.1% from December 2023.

“Contract activity fell more sharply in the high-priced regions of the Northeast and West, where elevated mortgage rates have appreciably cut affordability,” said Yun. “Job gains tend to have greater impact in more affordable regions. It is unclear if heavier-than-usual winter precipitation impacted the timing of purchases.”

© 2025 National Association of Realtors® (NAR)

The Lock-In Effect Is Real

 More Than 80% of Mortgages Have a Sub-6% Rate—and These Homeowners Aren’t Selling Anytime Soon

realtor.com/news/trends/more-than-80-percent-mortgages-have-rate-below-6

By Kiri BlakeleyJanuary 10, 2025

New York City school teacher Joann Mariani had no idea how extraordinary her timing was when she was shopping for a home in summer 2021.

In the thick of the COVID-19 pandemic—when lockdowns, face masks, and vaccines were common—she was looking for a new place to live in the upper Hudson Valley. At the time, mortgage rates had dipped to an astonishingly low 2% to 3%.

“It was a perfect-storm hot market,” says Mariani.

Competition was fierce due to pandemic-fueled migration shifts from urban centers, but savvy buyers also wanted to take advantage of these low rates.

When Mariani found her dream house—a three-bedroom, 1,046-square-foot home on Larchmont Road in Carmel, NY—she did not hesitate.

“I thought, ‘I better lock down this rate,'” she says.

In summer 2021, New York City school teacher Joann Mariani locked in a historically low mortgage rate below 3%.

(Joann Mariani)

To do so quickly, she bid $10,000 over the $265,000 list price. She also skipped applying for an FHA loan, instead cleaning out an old Roth IRA, withdrawing $75,000 for the down payment and closing costs and an additional $26,000 in taxes.

It was one of the best financial decisions she ever made, she says.

“Three months later, rates skyrocketed,” she adds. “A friend of mine bought a house near me the following year. Hers is only $4,000 more, but she’s paying $500 more a month.”

Since then, her home has seen a 36% appreciation, worth an estimated $100,000 more today than at purchase.

With her $8,354 annual property tax, home insurance, and mortgage, Mariani pays $1,851 a month, saving $450 per month from the rent she was paying for a three-bedroom home in the Bronx.

Extraordinary conditions

Mariani isn’t alone in her mortgage savvy. She and other homeowners who locked in low rates are holding on for dear life. This has created a lock-in effect for homeowners who are reluctant to trade in their low-rate mortgages for today’s higher ones.

In the third quarter of 2024, 21.3% of outstanding mortgages had an interest rate below 3%, according to the latest report from Realtor.com®.

The Freddie Mac fixed rate on a 30-year loan dipped below 3% in July 2020, and generally stayed below that threshold through September 2021, just when Mariani was closing on her dream home.

Highlighting how extraordinary these conditions were, this was the only period in the data’s history (back to 1971) when rates dropped below 3%. 

The lock-in effect

After roughly four months of improving mortgage rates, the tides have turned and rates are near 7% once again.

Mortgage rates reached a recent low of 6.08% in late September, but jumped to a six-month high of 6.93% for the week ending Jan. 9, according to Freddie Mac.

This is keeping many would-be sellers “locked in“ and hindering total inventory recovery.

Of the outstanding mortgages, 83% are still below a 6% rate and 21.3% are below a 3% rate. 

Roughly a third (33.9%) of outstanding mortgages have an interest rate between 3% and 4%, 18.1% have a rate between 4% and 5%, 9.5% have a rate between 5% and 6%, and 17.2% have a rate of 6% or greater.

Based on the recent mortgage rate report from Jan. 9, Freddie Mac revealed mortgage rates jumped to a six-month high of 6.93%, up from 6.91% last week.

Market conditions for the year ahead

For 2025, Realtor.com is forecasting that by the end of the year, the share of mortgages below 6% could fall close to 75%. Put differently, the share of mortgage holders with a rate of 6% or higher could increase by roughly 8 percentage points.

A recent Realtor.com survey revealed that a sizable 40% of potential buyers would find a home purchase feasible if mortgage rates were to drop below 6%, and 32% of buyers would be willing to participate if rates dropped below 5%. 

Easing inflation and mortgage rates will be key drivers of seller activity, which will relieve some of the high price pressure and competition felt in today’s under-supplied market. 

But it remains to be seen whether the Joann Marianis of the country, those with rates under 3%, will ever want to cash in.

“The thought of a home as a financial asset wasn’t even a consideration,” she says.

Instead, she says, she craved “freedom”—the ability to do what she wanted with her space and not be under a landlord’s rules.

“It was about leaving the city at the end of the day and having some quiet and green space. It was about not having to stress about putting nails in the wall to hang things, or how many cats I could foster. So freedom was probably the main reason for wanting to own.”

That doesn’t mean she’s not grateful for her low rate. “I had the right idea at the right time,” she says.

NAR: Young Buyers Still Fenced Out of Ownership

 By Jessica Lautz

Young adults face delays in homeownership due to high prices and interest rates, and low inventory, with first-time buyer rates at record lows.

CHICAGO — Today's young adults continue to face delays in homeownership compared to past generations at the same age. Not only is the homeownership rate lower for those under 35 today compared to past generations, but the first-time buyer share is lower, and the age of first-time buyers is older than seen historically. Let's break down these data points.

When looking at the U.S. population by age group, one can visually see that Millennials are the largest generation of Americans, which should translate into the largest generation of home buyers. Millennials (ages 26 to 44 in 2023) alone represent nearly 86 million Americans. This compares to 60.7 million Gen Xers and 64.1 million baby boomers. Represented on the first red line is the age of 38, which is the median age of today's first-time home buyers (the second red line is the age of 61, which is the median age of repeat buyers).

The age of first-time buyers today is the oldest seen since NAR first started collecting data on the age of buyers in 1981. Historically, a first-time buyer has been between the ages of 28 and 33. This represents a decade of lost housing wealth gains for homeowners. It also could mean one less move for a homeowner as they are purchasing at a later age. Thus, a home buyer could skip their starter home and move straight into a home that could fit their needs for the coming future.

Simultaneous to the jump in ages, the share of first-time buyers continues to lag at historic lows. The annual share of first-time buyers is currently at 24%, while the historical average was at 40% of all primary residence buyers dating to 1981. Certainly, low housing inventory, which has slowly increased, is a factor holding back buyers. In the last year, mortgage interest rates also hit a two-decade high, which further eroded housing affordability. In 90% of metro areas, home prices are rising.

Even among successful first-time buyers, a number have debts holding them back from saving for a down payment. Among those who said saving for a down payment was difficult, the most cited hurdles were high rent (49%), student loans (40%), credit card debt (36%), and car loans (33%). It is important to note that many of these expenses were being tackled during a high inflation environment, so it is unsurprising that 63% of first-time buyers cite the need to make financial sacrifices to purchase a home successfully.

Nearly one-third of first-time buyers this year had student loan debt. This is worth highlighting, as student loan debt payments for federal student loans resumed in October 2023, exacerbating household expenses for many young adults. A smaller share of first-time buyers cites child care costs as a hurdle, at 11%. However, overall, the cost of child care has increased and, in 2023, can range from $20,000-$28,000 annually per child, depending on the child's age and type of care setting. 

So, with that picture, what is the homeownership rate for those under 35 (the U.S. Census provides a consistent reading of the homeownership rate by age, though this does not match directly to generations)? When looking at the Census homeownership rate data, there have been positive reports that the rate improved for those under 35. This is true. From 2021 to 2022, the homeownership rate did improve; however, in 2023, there was a decline. If one compares the homeownership rate from 1982 to today and then separates the data by generation, it does not tell as positive of a story. For baby boomers and Gen Xers, the average homeownership rate for those under 35 was 39.7%. Unfortunately, neither Millennials nor Gen Zers have yet to reach that number.

It is essential to note that this snapshot does not tell the whole story. The young adult generation is diverse. The following blog will look at who purchases homes and the increased share of young adults purchasing homes with all-cash purchases and large down payments. Who are these high-income, wealthy young home buyers? Keep watching this space for the upcoming analysis.

© 2024 National Association of Realtors® (NAR)

Florida Consumer Sentiment Continues to Climb

 Florida’s consumer sentiment has seen a notable positive shift, rising nine points in the last couple of months, a UF analyst said.

GAINESVILLE, Fla. — Consumer sentiment among Floridians soared in December to 86.4, its highest level in more than four years, jumping 5 points from a revised figure of 81.4 in November. Meanwhile, national consumer sentiment rose 2.2 points, continuing its fifth consecutive monthly increase.

“As the year ends, Florida’s consumer sentiment has seen a notable positive shift, rising nine points in the last couple of months. Notably, all three forward-looking components of the index are at their highest levels in nearly five years. The previous highs for each component were recorded in February 2020, just before the pandemic began. At that time, Florida’s unemployment rate was nearing historically low levels, and consumer sentiment was at its highest point in nearly two decades,” said Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.

Among the five components that make up the index, four showed an increase and one decreased.

Floridians’ opinions about current economic conditions were mixed. Views of personal financial situations now compared with a year ago decreased slightly – nine-tenths of a point from 61.9 to 61. These views were divided among sociodemographic groups, with women and people younger than 60 expressing more favorable opinions. In contrast, opinions as to whether this is a good time to buy a major household item, like an appliance, increased 7.7 points from 65.2 to 72.9. Notably, this positive view was shared by all Floridians and was particularly strong among people with an annual income under $50,000.

“Inflation has cooled, but interest rates remain high. Nonetheless, with expectations of new import tariffs from the upcoming administration, it’s not surprising that consumers see now as a good time to purchase big-ticket items, anticipating price changes due to potential tariffs,” said Sandoval.

Floridians’ opinions about future economic conditions were positive with all three components rising this month. Expectations of personal finances a year from now increased 6.6 points from 95.9 to 102.5. Expectations about U.S. economic conditions over the next year saw the largest increase, rising 8 points from 91.1 to 99.1. Meanwhile, the outlook of U.S. economic conditions over the next five years increased 3.2 points from 93.1 to 96.3. These positive expectations were shared by most Floridians, except for women, who expressed more pessimistic views about the nation’s economic outlook over the next five years.

“Although the state’s unemployment rate rose slightly by one-tenth of a percentage point, to 3.4%, Florida’s labor market remains resilient, with total non-agricultural employment surpassing 10 million in November for the first time. This combination of consumer optimism, a strong labor market, and the additional interest rate cuts in December points to encouraging economic prospect, setting a steady course for the economy in the coming year as the new federal administration takes office,” said Sandoval.

“However, looking ahead, there are several challenges. While inflation has cooled, it remains above the Fed’s 2% target, which is likely to slow interest rate cuts next year, keeping borrowing costs high for a longer period. Moreover, the potential for trade tariffs under the incoming administration is something to watch, as they could make imported goods more expensive for businesses and consumers, thereby increasing inflationary pressure. Monitoring consumer sentiment will be crucial to gauge how consumers feel about the economy as we move into 2025,” Sandoval added.

Conducted November 1 to December 23, the UF study reflects the responses of 267 individuals who were reached on cellphones and 282 individuals reached through an online panel, a total of 549 individuals, representing a demographic cross section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2, the highest is 150.

Source: University of Florida

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