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Florida Real Estate Market Shows Signs of Cooling Amidst Potential Rebound

Florida coastline with a house and palm trees.

Florida’s real estate market experienced a slowdown throughout much of 2025, influenced by elevated mortgage rates and affordability challenges. However, emerging indicators, including easing interest rates and continued migration, suggest the market may be on the verge of a rebound. While some areas face localized pressures, the overall outlook points towards a recalibration rather than a collapse.

Key Takeaways

  • Florida’s housing market cooled in 2025 due to high mortgage rates and affordability issues.
  • Early signs indicate a potential rebound driven by falling mortgage rates and steady migration.
  • International buyer activity saw a significant increase in transactions and dollar volume.
  • Some regions, particularly in South Florida, are identified as epicenters of housing market weakness.
  • Projections suggest potential price moderation in specific Florida markets by mid-2026.

Market Slowdown and Contributing Factors

The slowdown in 2025 was largely attributed to several key factors. High mortgage rates significantly increased the cost of borrowing, impacting buyer affordability. This, coupled with existing home price pressures and rising insurance costs, dampened demand. Consequently, homes remained on the market longer, contributing to an increase in inventory, though not necessarily from a surge in new properties.

Globally, a slower economic growth environment and lingering uncertainty also played a role in softening demand for major purchases like real estate.

Signs of an Emerging Rebound

Despite the cooling trend, positive signals are emerging. A notable decrease in mortgage rates since the survey period has begun to invigorate sales activity. Furthermore, domestic in-migration to Florida, while slower than its post-pandemic peak, remains robust compared to pre-pandemic levels. International tourism and buyer activity also showed a significant resurgence.

International Buyer Activity

International buyers demonstrated increased confidence in Florida’s property market. Between August 2024 and July 2025, sales counts for residential properties by international buyers surged by 50%, with dollar volume climbing to $10.4 billion. Latin American and Caribbean buyers constituted the largest share, followed by European and Northern American buyers. South Florida remained the most popular destination for these buyers.

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Regional Weakness and Price Projections

While the overall market shows signs of recovery, certain areas are experiencing more pronounced weakness. South Florida, specifically the Miami, Fort Lauderdale, and West Palm Beach metro areas, has been identified as an "epicenter of housing market weakness." Homes in these regions are taking significantly longer to sell compared to the national average.

Projections indicate that around 24 Florida housing markets could see home prices moderate by mid-2026. Markets such as Punta Gorda, North Port, and Cape Coral are among those expected to experience the most significant price adjustments. This moderation is seen as a natural correction after a period of rapid appreciation, moving towards a more balanced market.

Outlook for the Future

The US real estate market, including Florida, is anticipated to see a modest recovery in the latter half of 2025, potentially leading to several years of growth. Analysts predict that easing interest rates will act as a catalyst. However, a return to the abnormally low interest rates of the past is not expected. The market is transitioning towards a more balanced state, offering potential opportunities for both buyers and sellers who adapt to the evolving conditions.

Sources

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