In the US South, the number of unsold new homes has hit an all-time high, particularly in Florida and Texas. In June, 293,000 newly built houses were still on the market, surpassing the previous high of 291,000 in August 2006.

High borrowing costs are discouraging sellers from listing properties elsewhere in the US, but in the South, developers continue to build new homes. This surplus may benefit homebuyers by potentially lowering prices, which remain high compared to pre-pandemic levels.

A real estate analysis firm noted a correction in market prices, though it’s still minor compared to previous increases. The CEO of a major homebuilder acknowledged the increased inventory of new and old homes in Florida and Texas, reporting a drop in orders for new homes in both states in the company’s second quarter.

This situation in the South stems from the pandemic when people moved away from certain areas, making Florida and Texas popular destinations. Investors and builders followed, leading to increased development during this period.

These states are no longer as attractive as they were during the pandemic. Migration trends are slowing down and even reversing in some cities. Florida, once the most popular state to move to, now ranks third, and Austin, Texas, a top move-in city during the pandemic, is now a top move-out city.

A real estate expert explained that many who moved to Texas and Florida during the pandemic are now leaving. Reasons include being called back to the office, job layoffs, and a desire to return to their original locations.

At the same time, housing investors and pandemic-era buyers are selling their properties to take advantage of high prices before they drop further. This has created a surplus, with existing-home inventory in the South increasing by nearly 49% year over year in June, the biggest rise in any region.

In Texas, many sellers are investors offloading properties at a higher rate than the national average and the state’s pre-pandemic norm. An analysis found that a significant percentage of Texas sellers this year are investors, compared to the state’s average between 2017 and 2019 and the current national average.

These investors bought properties before the pandemic and have seen significant price increases. However, the rental markets in key Texas cities are softening, prompting investors to sell before rents drop further. Higher property taxes and insurance costs due to worsening hurricane trends have also made it more expensive to hold these properties.

In Florida, many pandemic buyers are reselling their properties, especially townhomes and condos. Inventory levels for single-family homes, townhouses, and condos are at their highest in the past four years. For condos and townhomes, it’s a buyer’s market, with it taking longer to sell all the supply on the market compared to a year ago. New state regulations following a tragic condo collapse in 2021, along with higher homeowners insurance premiums, have added costs that many condo owners cannot afford, forcing them to sell.