Southwest Florida housing construction slows as permits decline

PUNTA GORDA, Fla. (WINK)—Construction of new homes across Southwest Florida appears to be slowing down as permits decline. 

Some realtors and home builders said it's as post-pandemic market correction. But some economists said it's a sign of deeper issues that are rippling across the state. 

Florida Gulf Coast University finds Southwest Florida issued 5,620 single-family building permits through May of this year. That's down 21.4 percent compared to last year. The Fort Myers News-Press first reported on the data.

"We don't need any more new homes being built," said Punta Gorda realtor Brian Helgemo. "We could sell what's existing."

Housing inventory remains above pre-pandemic levels, according to Amir Neto, director of FGCU Regional Economic Research Institute. Helgemo said there's a large number of homes for sale, reducing the need for new construction.

Roughly 23,500 homes are currently listed in Lee County, according to data from Realtor.com. Helgemo said builders are offering big incentives to move property - including waiving closing costs and offering commission to realtors. 

"Three years ago they wouldn't pay us a commission," Helgemo said. "And now, you know because there are so many homes, they're trying to get that business."

Shan Swelland is president of the Charlotte DeSoto Building Industry Association. Swelland also described the decline as a market correction.

He said Charlotte County home permits are down, but noted that permit applications are holding steady. There was a strong demand for people to move inland and remodel their homes last year, the association said. 

"We had tons of hurricane damage, and you know there was a lot of work from that," Swelland said. "And now we're just steadying out again, and hopefully back to building homes again."

Swelland said contractors are still dealing with higher construction costs that exploded during COVID-19. Building material prices have increased at the fastest pace in three years, according to the National Association of Home Builders. 

Prices of building materials used in residential construction, excluding energy, were up 3.7% in April according to the most recent Producer Price Index.

Prices are also going up for home buyers. 

Chris Jones is an economics professor at the University of South Florida. He is also president of Florida Economic Advisors, a Tampa-based economic consulting firm.

Jones said there is a growing affordability gap for home buyers. The national median single-family home price grew to five times the median household income in 2024, according to Joint Center for Housing Studies at Harvard University. That nearly matched previous record highs.

He said the Fort Myers area has the highest unemployment in the state at 4.9 percent. 

"There's no question that homes are becoming increasingly unaffordable for the average working-class individual in most of our metropolitan markets," Jones said. "Including Southwest Florida."

Fort Myers and Naples are also a big second-home market, Jones said. As inflation forces Americans to limit their spending, fewer people are investing in a winter home. 

Jones cautioned that month-to-month permit data can be misleading. But he said builders are scaling back new development across the state.

Developments are smaller now than in the 1990's, Jones said. As fewer people move to Florida and homes sit on the market, he said it's possible permits could keep declining. 

"It's something that I think should not be surprising to anyone," Jones  and would not be surprising if it continues."