High interest rates, coupled with soaring insurance costs, have slowed home sales in Seminole over the past year, county officials said this week.

According to data released by the Seminole County Property Appraiser’s Office, the number of new and existing homes sold across the county in 2023 dropped nearly 20% from the previous year. In 2022, for example, a total of 10,942 homes sold for roughly $4 billion, compared to 8,757 last year for about $3.4 billion.

Explaining the decline during a presentation to county commissioners Tuesday, Property Appraiser David Johnson noted home sales are tied to three costs: property taxes, homeowners insurance and interest rates.

In recent years, interest and insurance rates have shot up, while Seminole’s overall property tax rate of nearly $4.88 per $1,000 of taxable value has remained the same for more than a decade.

As of Thursday, for example, a home mortgage at a 30-year fixed rate was 6.79% — compared to 3.17% at the same time in 2021 — a jump of more than 114%, according to the Federal Home Loan Mortgage Corp. more commonly known as Freddie Mac.

“Any time you are raising interest rates, it adds to the costs [of buying a home] and that certainly removes certain members in the market of buying a house,” Johnson said. “And that’s not just a Seminole County phenomenon. It’s about the Feds getting inflation under control.”

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Jeremy Wood, a real estate agent for Keller Williams Heritage Realty in Altamonte Springs, said the primary concern for homebuyers is the monthly costs of their mortgage. And any increase or decrease in that rate plays a big factor.

“I have many, many people that are just waiting for that rate to go down” before they sign the paperwork to buy a home, he said. “But the flip side: The moment [interest] rates start going down, buyers will start coming out and prices will go up.”

County officials point to skyrocketing insurance costs as another reason for the slowdown.

According to the Insurance Information Institute, average premiums in Florida are about $6,000 a year — a 102% increase over the past three years. The state-run Citizens Property Insurance Corp. put in rate hikes of 70%. Florida now has the highest homeowners insurance rates in America, according to the institute.

“What’s happening is that if you can’t get the home insured, you can’t get the mortgage,” said County Commissioner Andria Herr, who is an executive vice president at Hylant insurance. “If there is one thing that the Legislature needs to focus on it has to be this insurance crisis.”

As a result, some homebuyers who can’t get insurance will forgo financing and pay entirely in cash. Or companies buy homes in established neighborhoods to rent them out, she said.

“That changes the whole dynamic of the community,” Herr said.

Even so, despite slowing home sales prices have ticked up throughout the county, albeit slowly.

The median sale price of a new single-family home in Seminole is expected to be $472,000 this year, according to county projections. That’s less than a 1% jump from last year when it was $470,000. But in 2022, new home prices jumped 15.29% from 2021 to $462,500.

However, prices of existing homes this year have dropped by just over 2% from the end of last year to $420,000. In 2022, the median sale price of a new home peaked at a historic $462,500.

Johnson said he expects home prices to start creeping up by as much as 3% to 5% in the coming months as buyers become accustomed to higher interest rates — or the Federal Reserve nudges those rates downward.

“There’s a psychological thing to this,” he said. “People will start feeling that maybe I can [buy a house]. This area is an extremely attractive area for folks to come and invest in. People want to live here … But people are just waiting on the sidelines to pull the trigger.”

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Last year, 1,148 new homes were constructed in Seminole County — a nearly 11% jump from 2022.

Johnson also noted that “as inflation gets under control, the Feds may start lowering interest rates again, and that could trigger more activity [in the housing market].”

Johnson’s presentation to commissioners came as county staff begin drawing up the budget for next fiscal year, which starts Oct. 1.

The report also shows commercial real estate sales dropped by just over 31% from 576 in 2022 to 396 last year.

Of the county’s roughly 43,000 apartment units, up to 96% are currently occupied. Apartment dwellers currently face rent increases between 3% and 5% annually, according to data.

The taxable value of all properties in Seminole County was estimated at $49.6 billion as of December 2023. That’s a 10.5% increase from 2022. In 2024, the taxable value is expected to increase by 7%, Johnson said.

Johnson also cautioned about a growing number of empty office buildings.

“Most of it [office space] is along the International Parkway corridor,” he said. “There is no mystery that some of those buildings are empty. Yet they are paying their rents because they have a lease.

“But when those leases come up for renewals, the question is: Are they going to renew at the same level?”

mcomas@orlandosentinel.com