High Home Sales Prices as Economic Activity Resumes in the Palm Bay HMA

The Palm Bay-Melbourne-Titusville Housing Market Area (Palm Bay HMA) sits on the northeast coast of Florida, includes all of Brevard County and is coterminous with the metropolitan statistical area of the same name. The Palm Bay HMA is located about an hour due east by car from Orlando. The area is home to the John F. Kennedy Space Center and the Cape Canaveral Space Force Station, whose space-flight activities attract many tourists. The HMA’s current population is estimated at 614,200. A recent Comprehensive Housing Market Analysis highlighted economic and housing market activity in the area.

Economic Activity Resumes as Restrictions Are Lifted

Over the past year, economic activity in the Palm Bay HMA declined because of statewide restrictions implemented to limit the spread of the coronavirus. Statewide restrictions have been lifted, and during the 12 months ending June 2021, nonfarm payrolls declined by 0.7 percent for a loss of 1,700 jobs in the Palm Bay HMA. During the same period, the unemployment rate in the HMA was 5 percent, lower than the national rate of 6.9 percent and the peak rate of 13.2 percent in April 2020, at the onset of the pandemic.

The professional and business services sector is the largest employment sector in the Palm Bay HMA owing largely to the aerospace industry and the consultants, contractors, and engineers who support it. During the 12 months ending June 2021, employment in this sector increased by 2.5 percent, or 900 jobs. Although the professional and business services sector is the area’s largest employment sector, it includes only one of the HMA’s top employers: TTEC Holdings Inc.

The education and health services sector is the second-largest employment sector in the Palm Bay HMA, accounting for 15 percent of area payrolls. During the 12 months ending June 2021, employment in this sector decreased by 5.1 percent, or 1,500 jobs. The sector includes the largest employer in the area, Health First, Inc., which boasts more than 8,000 workers.

The manufacturing sector is the HMA’s third-largest employment sector, accounting for 13 percent of area payrolls. The sector includes 4 of the area’s 10 largest employers: L3Harris Technologies, Inc.; Northrop Grumman Corporation; Rockwell Collins, Inc.; and Lockheed Martin Corporation. During the 12 months ending June 2021, employment in the manufacturing sector increased by 4.6 percent, or 1,300 jobs.

During the next 3 years, nonfarm payrolls are forecasted to increase 1.3 percent annually.

Low Inventory, High Sales Prices, and Increased Permitting

Sales market conditions in the Palm Bay HMA are currently tight, with an estimated vacancy rate of 1 percent. Home sales in the HMA have fallen over the past year because of low inventory. During the 12 months ending June 2021, 15,200 homes were sold, down 7 percent from the previous year. Low inventory has also impacted home sales prices, which increased 13 percent during the same period to an average of $294,600.

During the 12 months ending June 2021, 3,475 homes were permitted for construction, a 40 percent increase over the previous year. Approximately 30 percent of home construction activity is centered around the city of Palm Bay.

Rental housing market conditions are balanced, with an estimated vacancy rate of 11 percent. During the 12 months ending June 2021, 1,475 units were permitted, a decline of 27 percent from the previous year.

Over the next 3 years, demand is estimated for 7,950 for-sale homes and 3,425 rental units. For more in-depth analysis, see the recent Comprehensive Housing Market Analysis on the Palm Bay HMA.