TAMPA, Fla. (WFLA) — Tampa is seeing the highest share of home sales in Florida right now as home sales in the state drop to a lower level.

Florida Realtors market data showed the number of homes sold in the state from December to January fell 23%.

Home sales in Tampa fell 19.35% from December to January, but still made up about 16% of all Florida home sales.

Although home sales in January dipped 23%, inventory levels were 134.2% higher than the year before, according to Florida Realtors. However, the dollar volume—how much the overall housing market sales totaled—fell 29%, contributing to a $3.4 billion drop in January, year over year.

Florida Realtors Chief Economist Dr. Brad O’Connor said the drop in sales isn’t a surprise, due to higher interest rates. With inflation still up and mortgage rates remaining above 6%, economic factors have “continued to erode buyer demand.” Statewide sales of single-family homes were down 32.5% from year to year, according to Florida Realtors.

“High mortgage rates are not only affecting homebuyers,” O’Connor said. “They’re also discouraging some potential sellers from listing their homes for sale, as well – particularly those who would be selling their primary residence and would therefore have to finance their next home at these higher rates. As a result, the level of new listings we’ve seen in recent months has been below normal and that trend also continued into January.”

O’Connor said the number of new listings for existing single-family homes had fallen 4.8%, while townhomes and condo sales fell by half as much in the past year. He continued, saying the ratio of buyers to sellers is the “most important factor” for housing prices, and that high ratios mean “widespread bidding wars that drive up prices.”

2023 Florida Realtors President G. Mike McGraw, a broker-associate with RE/MAX Central Realty in Apopka said Florida’s pre-pandemic housing shortage was also a factor.

As affordable housing remains a high priority for the federal government and Florida lawmakers, different strategies are being undertaken to address the needs of Americans and Floridians. At the state level, lawmakers are working to make housing more affordable for Florida’s workforce.

Federally, the U.S. Department of Housing and Urban Development announced changes Wednesday to mortgage insurance premiums for residents, aimed at making homeownership itself more affordable.

HUD will be reducing annual premiums to give a minimum savings to prospective buyers of $800 per year to $1,400 per year, depending on circumstance.

“Today, FHA implements major reductions to the annual premiums it charges homebuyers for mortgage insurance, making homeownership less costly for millions of Americans. The median home price in the United States as of the fourth quarter of 2022 was $467,700, meaning that HUD’s action would save a buyer at this price point more than $1,400 a year,” HUD said in an announcement. “In total, this action will help low- and moderate-income Americans save an estimated $600 million in the next year alone, and many billions over the next decade.”

Secretary of HUD Marcia Fudge said the steps being taken will make sure housing is more affordable and address “longstanding disparities in homeownership” through the reduced costs for those with Federal Housing Administration mortgages. Roughly 850,000 mortgage borrowers are expected to benefit from the change.

In terms of affordability, the latest Consumer Price Index showed that the single biggest driver of inflation in the past year was housing and shelter. Housing costs were nearly half of all price increases driving inflation in January, according to the Bureau of Labor Statistics. Data from the CPI showed housing rose roughly 44.4%.