Although prices continue to rise in Sarasota County, there are more homes for sale, and less homes are going under contract, resulting in fewer closings.  This will ultimately slow down the rate of appreciation, although at a current 3.5 month supply of homes based on closed sales, prices will continue to increase, albeit at a slower pace.  Here’s why.

In June, the average price per square foot was $199, 10.6% higher than June of last year when it was $180 per square foot.  The quarterly average for the past 3 months was $200.71 per square foot, an 8.7% increase over the same 3 months last year.  Similarly, median sold prices fairly tracked the uptick in average sold prices per square foot:  In June the median sold price was $238,000; in June 2015 it was $222,000, a 10.7% increase.

Contrast that with the number of homes that went under contract during the past 3 months.  It is trending down.  Note, pended sales generally close within 2 months, and therefore, are a good indicator of closed sales over the next 2 months.  Last month 1,006 homes went under contract, 10.7% less than the 1,126 in June 2015.  For the current quarter there were 3,341 homes that went under contract, representing 8.5% less than the 3,652 that were pended for the same quarter last year.  True to form, there were 5.4% less closings this past month vs the same month last year; 1,164 closings in June 2016, 1,231 in June 2015.  On a quarterly basis there were 8.2% less closings; 3,504 for the past 3 months, and 3,736 for the same quarter last year.

If the next few quarters continue on the current path of fewer homes going under contract, resulting in fewer closings, there will be an increase in the supply of homes for sale.  This will naturally slow down the rate of appreciation.  At the current pace, at a minimum price appreciation should moderate to a 6-7% increase (still historically strong), and in some neighborhoods it will be flat.