• Housing prices across the United States, especially in Florida, are surging due to low inventory levels, rising mortgage rates, and population growth.
• The lack of homes for sale has resulted in a significant inventory shortage, inflating home prices despite the Federal Reserve’s efforts to moderate the market.
• Affordability is a major struggle, with the cost of buying a median-priced home reaching a record high, and Florida facing its own housing crisis due to surging inflation and limited housing stock.

Housing prices across the United States continue to surge, with a notable increase observed in Florida, according to a new report by Jacksonville, Florida-based Black Knight, Inc. The report suggests an impending shift in annual home price growth fueled by low inventory levels and rising mortgage rates.

But the report also underscores a larger economic problem for the Sunshine State: rising population levels and increased demand for housing have spiked housing costs, which comprise a third of the consumer price index. That, in turn, is becoming political fodder because Florida is feeling the inflation pinch more than most other states.

The Black Knight Home Price Index (HPI) set a new record high in May, marking a full reversal from the price decline observed late last year. Of the 50 largest markets, 27 have returned to or exceeded their prior home price peaks, primarily in the Midwest and Northeast,  though Florida remains a housing price hotspot due to its rapid population growth, strong economy and rising demand for housing.

Also contributing the problem: a lack of homes for sale. Inventory levels are 51% lower than pre-pandemic levels, resulting in an uphill battle for buyers looking for a deal in the current housing market. This inventory shortage, which has affected 95% of major markets, is inflating home prices despite the Federal Reserve’s efforts to moderate the market through increased interest rates.

Affordability continues to be a struggle – particularly in major metros like Miami. As of June 22, the principal and interest payment needed to buy the median-priced home has risen to $2,258, marking the highest on record. It now takes 35.7% of median household income to make the average payment, the closest the housing market has come to the least affordable month for housing in the last 37 years.

Among the hardest hit by these changes are Western locales such as Phoenix, Boise, Ogden, San Francisco, and Colorado Springs. Each of these metro areas has seen significant inventory fluctuations, with reductions of more than 30 percentage points as compared to pre-pandemic levels. But Florida is facing its own escalating housing crisis, primarily due to surging inflation. The Miami-Fort Lauderdale-West Palm Beach area leading the nation with a 9% inflation rate for the 12 months ending in April, more than double the national average. The Tampa-St. Petersburg-Clearwater metro area ranks third, with an inflation rate of 7.3% for the year ending in May.

Florida saw the most significant population growth of any state from July 2021 to July 2022, according to the Census Bureau’s latest estimates. That influx, coupled with rising interest rates, a limited housing stock, and pricier property insurance, has significantly increased the challenge for Florida residents trying to make ends meet.