by Mike Colpitts 
- Home sales tick up slightly during the month of August in Fort Myers over the previous month.
- The slight increase came despite sizzling hot temperatures during the month, which usually slows housing market sales in Southwest Florida.
- A drop in mortgage rates could propel the market higher and trigger an increase in home prices.
Home sales ticked up slightly during the month of August in the Fort Myers area as interest rates declined marginally. Just 26 more homes sold during the month than in July throughout the region.
The increase meant that 1,460 homes, condos, townhouses and mobile homes sold during the month, according to statistics from the Royal Palm Coast Realtor Association multiple listing service. August is typically one of the three slowest months for housing sales in the area due to the summer heat.
Some 336 single family homes sold in August in Fort Myers. The condo market is hampered by higher homeowner association dues and other issues.
Mortgage rates are at a 10-month low. Purchase demand is slowly rising on the back of lower rates. Home prices are still declining but not at the fastest pace they have been in the past two and a half years. Many homebuyers still face affordability challenges. Lower rates may provide them with the impetus to enter the market.
The rate on a 30-year fixed rate mortgage averaged 6.56%, according to Freddie Mac. Despite the elevated rates, homeowners are cashing out on years of home equity gains as refinancing hit a new high for the last three years. Cash-out home refinancing reached a new high in the April-June quarter, according to home loan data tracker ICE Mortgage Technology. The boom comes at a time when homeowners are at the highest home equity levels in almost a generation.
Home equity is at the highest level since the housing market plummeted in 2008 during the U.S. financial crisis. Despite lower home prices in most of Florida than three years ago, the market in Southwest Florida has remained slow due to the summer heat.
The home sales tick up resulted from the majority of home sales in August being single family homes in Fort Myers, with 1,122 selling during the month in all of Lee County. That’s 50 more homes than sold in the previous month in the region. A drop in mortgage rates, which may occur later this month when the Federal Reserve meets could send mortgage rates lower, prompting a surge in home sales.
Record low mortgage rates increased almost three years ago after the Fed raised rates to keep to its two prong mandate, which is to keep inflation in check and maximum employment. The high level of employment is the total measure of employment that the economy can experience without any overt inflationary pressures. Nearly everyone who wants a job can secure one during maximum employment.
The Florida condo market is still seeing sales move slowly as a result of higher mortgage rates, higher homeowner association fees, more expensive insurance premiums and new state legislation forcing condo associations that are older to update their buildings to new safer levels of construction. However, homeowner insurance rates have dropped an average of more than 10 to 15 percent since jumping after Hurricane Ian three years ago this month. Only 222 condos sold in all of Lee County during the month, a slight up tick from July.
The inventory of homes listed for sale on the market is still healthy in the Fort Myers area with about a nine month inventory, making the market strongly in favor of buyers. Many homeowners have taken their homes off the market in the last year as a result of sellers getting lower prices and a drop in demand from previous years.