The Florida economy saw a strong rebound in economic activity as job growth came roaring back in 2017Q4. We expect the state economy to keep this momentum headlining into 2018, supported by positive demographics, sustained gains in the labor market and an improving housing sector. A large number of people continue to migrate into the state, adding about 305,000 new Floridians from 2016 to 2017. Helping to draw workers to the state is Florida’s job engine, which is firing on all cylinders as the three large private sectors of manufacturing, construction and services saw strong job gains again, up 204,700 jobs in 2017. This is creating a virtuous cycle of more people, more demand and more jobs. This is also putting more pressure on home prices as increased housing demand collides with tight home inventories. According to Florida Realtors, the months’ supply of single-family homes for sale were down to 3.6 months as of December. A months’ supply of 5.0 to 5.5 months would be considered a more balanced market. Florida existing home sales, which makes up the much larger portion of the state’s overall housing market, were flat in 2016 and 2017. The supply of new single-family homes, which were up 10 percent in 2017, can help fill that gap. While we expect to see ongoing gains in Florida’s single-family housing starts in 2018, a shortage of construction workers, along with uncertainty surrounding declining affordability through higher mortgage rates, will constrain the number of new housing projects this year. This means tight inventories for Florida’s single-family housing market are likely to persist through 2018, keeping pressure on prices.
For a PDF version of this report click here: FL_Outlook_0218.
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