Douglas Elliman’s third quarter market report shows a slow down, which, as it turns out, is probably a good thing.

On Wednesday, Douglas Elliman’s South Florida brokerage released its third quarter market reports for the Miami, Fort Lauderdale and Boca Raton areas.

Miami

In Miami, the east coast brokerage’s performance was split between the coastal mainland, which includes Aventura, Brickell and Coral Gables, and the Miami Beach and Barrier Islands area.

Closer to Miami Beach, both sales prices and inventory rose 9.8 percent and 26.9 percent year-over-year, respectively, with particularly strong gains in the luxury market. Condos, townhouses and single-family homes all spent an average of 56 days on the market, down from 61 the same time last year, but the number of closed transactions fell dramatically, both by quarter (down 20.8 percent) and year (down 26.7 percent).

In the mainland, overall sales prices were less impressive, falling 3.3 percent year-over-year, and 9.5 percent quarter-over-quarter. However, condo and single-family homes continued rising, increasing 18.2 percent and 7.8 percent year-over-year, respectively. The number of closed transactions increased from last quarter and the same time last year, but neither gain was significant.

Fort Lauderdale

In Ft. Lauderdale, inventory has been building. However, sales have failed to match pace, edging the area closer to a surplus of homes. The median sales price for single-family homes dropped 6.4 percent quarter-over-quarter, but raised 1.6 percent year-over-year, while prices for condos and townhouses rose a modest 2.9 percent quarter-over-quarter, and 8.4 percent year-over-year.

The area’s luxury condo market has seen better days, with the median sales price falling 12.3 percent quarter-over-quarter and 8.7 percent year-over-year. However, luxury single-family homes sales prices, despite falling more 20 percent quarter-over-quarter, rose year-over-year by 26.2 percent. Closed transactions were down for both property types.

Boca Raton

In Boca Raton, sales activity mimicked that of the Fort Lauderdale area, with a rising inventory (5.4 percent year-over-year) slowing the pace of the market. Still, the median sales prices for condos and townhouses, as well as single-family homes, in the area were up 4 percent and 7.1 percent year-over-year, respectively. Luxury sales prices, while improving for single-family properties (15.6 percent), were down a significant 8.5 percent for condos and townhouses.

Closed transactions for all property types, both traditional and luxury, were down year-over-year, with waterfront condos leading the decline, down more than 20 percent.

The Market Moving Forward

The implications of Douglas Elliman’s report, while ultimately complicated, can be refined into a simple explanation, as said by the report’s author, Jonathan Miller, president and CEO of real estate appraisal and consulting company Miller Samuel, Inc: “If you look across the region, we’re seeing inventory edge higher and sales, for the most part, falling short of a year ago. The market is still moving at a brisk pace, but it’s cleared it’s slowed significantly since 2013.”

Miller said the reason behind the third quarter slow down is two-fold. First and foremost, he said, 2013 was an anomaly year, specifically citing the extremely high sales volumes, which would be hard to match two years in a row.

The second reason, he pointed out, is that activity in 2013 was largely the result of pent up demand and the release, which preceded a huge influx of buyers into the market.

Miller called this phenomenon a positive, noting that rising prices, driven by persisting demand, are continuing to entice sellers into the market, which has the effect of stifling the extreme price increases.

“Thankfully, the addition of inventory has helped tame price increases,” he said. “It’s apparent we’re moving closer to a balance that will be more sustainable in the long run.”