Last Updated on February 22, 2025 by Bertrand Clarke
Nick Gerli – Revenue Consulting – February 15, 2025
The Florida housing market is currently experiencing a notable shift, marked by price adjustments and a growing inventory of newly constructed homes. While the broader national real estate landscape presents its own complexities, the situation in Florida is particularly noteworthy due to the aggressive strategies employed by home builders.
Data indicates a significant accumulation of completed “spec homes”—properties built without a specific buyer in mind—across the United States. According to the U.S. Census Bureau, the number of these homes sitting vacant on builder lots has reached levels not seen since the housing market downturn of 2008-2009. Florida, in particular, is witnessing a concentrated surge in new construction, with builders continuing to develop properties despite a cooling in buyer demand.
This persistent construction activity, in the face of a market that is showing signs of slowing, has led to a notable trend: substantial price reductions on new homes. Some builders are implementing price cuts ranging from $30,000 to $60,000 or more on properties under construction or nearing completion. This aggressive pricing strategy appears to be driven by a desire to move inventory quickly and proceed to new development projects.
“We’re going to keep building, and we don’t care if we have to cut the price 14-15% to move the inventory,” one builder stated. “We’re going to do that so we can sell those homes and then move on to the next community.”
Reports indicate that home values in certain areas of Florida are already reflecting these price adjustments. Data suggests that year-over-year home values have decreased by 2% to 5%, with the potential for further declines as builders continue to adjust prices to meet market demand.
This builder-driven price correction is creating a distinct dynamic within the Florida real estate market. Unlike the resale market, where many sellers remain hesitant to acknowledge the changing landscape and maintain high listing prices, builders are swiftly adapting to the current reality. Their actions are offering a clear signal about the direction of the market.
The stock performance of major home builders further supports this trend. Companies such as D.R. Horton and Lennar, two of the largest home builders in the United States, have experienced significant stock declines in recent months, contrasting with the overall growth of the S&P 500. This disparity suggests that investors are recognizing the challenges faced by the home building industry, particularly in markets like Florida.
The implications of these builder strategies extend beyond the new construction sector. Existing homeowners who purchased properties at peak prices may now find themselves competing with newly built homes offered at significantly lower prices. This situation could lead to downward pressure on resale values, creating challenges for homeowners looking to sell.
The divergence between the builder market and the resale market highlights the complexities of the current real estate environment. While some sellers continue to operate under the assumption of sustained high prices, builders are proactively adjusting to market realities, potentially accelerating the overall correction in home values.
The long-term impact of these trends on the Florida housing market remains to be seen. However, it is evident that the actions of home builders are playing a crucial role in shaping the current landscape. As builders navigate the challenges of inventory management and shifting buyer demand, their strategies will continue to influence home prices and market dynamics across the state.
