According to Zillow, Florida home prices were down by 4.8% in August 2025 compared to a year earlier. And prices might have further to fall before hitting “bottom” and inching upward.
But why? Why are home prices in Florida falling in 2025, at a time when they’re stable or rising slowly in many other parts of the country?
It’s not just one factor causing home values to drop across the Sunshine State, but a “perfect storm” combination of multiple factors.
8 Reasons Why Florida Home Prices Are Falling
Here are some of the primary reasons why prices are falling:
- There are more homes on the market, easing competition.
- Higher mortgage rates make homes less affordable for many buyers.
- Prices rose quickly during the pandemic, so the market is correcting.
- More sellers are cutting prices or pulling listings.
- Slower migration means fewer new buyers in some areas.
- Rising insurance costs and hurricane risks make buyers cautious.
- Condo rules and costs are weighing on prices in some markets.
- More new construction adds competition for resale homes.
That’s the short version. Now let’s take a closer look at these eight factors.
1. There are more homes on the market, easing competition.
The number of active real estate listings in Florida has increased significantly over the past couple of years, and especially within the past 12 months or so.
In short, there are a lot more homes for sale these days.
Inventory growth gives home buyers more choices and reduces the urgency to pay top dollar. Over time, supply gains put downward pressure on prices, a situation we’re seeing right now.
According to Brad O’Connor, Chief Economist for Florida Realtors:
“We’ve been chronicling the expansion of Florida’s inventory of homes for sale since early 2022. For more than a year … inventory levels have been in excess of the levels that were typical of the period of housing market stability we experienced from 2014 through 2019.”
2. Higher mortgage rates make homes less affordable for many buyers.
Mortgage rates recently dropped to their lowest level in months, according to an August 2025 statement from Freddie Mac. But they’re still a lot higher than the 2020 to 2021 record lows.
Mortgage rates in the mid-6% range have increased housing costs and squeezed out some buyers who could have afforded a house at pandemic-era prices.
Higher borrowing costs reduce the number of buyers willing or able to pay inflated prices, so sellers must lower their asking prices to attract buyers. State and regional housing market reports point to this as a main reason why home prices are dropping in Florida.
According to Mark Zandi, Chief Economist for Moody’s Analytics:
“Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7% soon. That, however, seems unlikely.”
Analysts at Goldman Sachs expect home prices to drop in some markets over the next two years. Out of nearly 400 cities they studied, about 15% could see prices fall by more than 5%. The weakest housing markets include Miami and Orlando, along with Nashville and Dallas.
3. Prices rose quickly during the pandemic, so the market is correcting.
Florida experienced larger-than-average price gains during the pandemic. The median home price skyrocketed from $252,000 in early 2020 to nearly $400,000 by fall 2022.
When a housing market accelerates faster than fundamentals (income, population growth, local jobs) it becomes vulnerable to bigger price declines once demand eases.
Analysts who track the pandemic surge say Florida’s outsized run-up is a key reason why price corrections there look larger than in some other states.
In scenarios like this, the faster prices rise, the longer they fall.
4. More sellers are cutting prices or pulling listings.
In cities and metros across Florida, we’re seeing higher rates of price reductions and “de-listings” by home sellers.
Back in May, Realtor.com reported that Florida cities had some of the highest percentages of price reductions among cities nationwide, with Tampa, Cape Coral, and Jacksonville topping the list.
That pattern—sellers either cutting price or pulling the listing and waiting—often occurs when buyer demand weakens and puts downward pressure on comparable prices.
5. Slower migration means fewer new buyers in some areas.
Florida is still growing overall, but migration flows that fueled the pandemic-era housing market boom have slowed.
Some high-cost metros, like parts of South Florida, have seen net domestic outflows or much smaller inflows than during the boom. With fewer new residents chasing homes, demand cools and prices can drop—especially in areas that saw the biggest pandemic gains.
6. Rising insurance costs and hurricane risks make buyers cautious.
Florida has some of the highest home insurance premiums of any U.S. state, and well above the national average. This reduces demand among buyers and weighs on home prices.
According to a 2023 report by LexisNexis Risk Solutions, the average premiums for Florida homeowners rose nearly 60% between 2015 and 2023, the largest increase in any state.
A 2025 survey from Florida Atlantic University found that 54% of Floridians “are worried about being able to afford and maintain homeowners insurance due to climate change.”
Some insurance companies have left the state entirely, adding to the crisis.
High insurance costs and visible storm risk make some buyers hesitate to enter the market. And those who do enter it are less willing to pay the full list price, especially in storm-prone areas.
7. Condo rules and costs are weighing on prices in some markets.
Condo and multifamily markets in some Florida cities have been hit especially hard. The Surfside condo collapse led to tighter building safety rules, resale restrictions, and rising insurance and association costs.
Those local issues can push condo prices down and affect nearby single-family comps in tighter urban markets.
8. More new construction adds competition for resale homes.
During the pandemic, some Florida builders raced to add condos and for-sale homes after demand jumped. In places where supply has caught up, buyers now have more choices—and less reason to make a full-price offer.
How Long Will It Last?
We’ve explored some of the reasons why home values are dropping across the state.
Many people are now wondering—how long will it last?
While no one can predict future real estate trends with complete accuracy, current conditions suggest that Florida home prices might have further to fall.
In other words, the bottom isn’t in sight yet.
But the Sunshine State still has several factors going for it, when it comes to real estate market demand. Florida is one of the fastest-growing states in the U.S. in terms of population. This increases demand for homes on both the rental and purchase side.
Our outlook: We expect home prices in Florida to continue dropping through the rest of 2025 and into early 2026. At that point, they might level off and remain flat for a while.
But that’s the equivalent of an educated guess, so don’t bank on it.
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