Home sales in the Charleston region dropped by nearly 7 percent in March, most likely held back by the rising costs of homeownership, but the market isn’t expected to stay down for long.
Like the national market, regional sales have been suppressed by high mortgage rates and median home prices rising 2.6 percent from March 2023 to a high of $413,556 last month, according to preliminary data from the Charleston Trident Association of Realtors.
But prospective buyers and sellers seem to be getting tired of waiting around for either to drop and are ready to get back in the market, said Matt O’Neill, CEO of Charleston-based Matt O’Neill Real Estate.
Already, O’Neill said he’s dusting himself off from March and looking optimistically ahead to the rest of the critical spring sales season. He said pending April home closings at his firm total $38 million in volume, up from $23 million for the same period of 2023.
“This time last year, the market was still in shock from high interest rates and many waited for things to settle,” O’Neill said. “What you’re seeing now is people are just getting on with their life and they’re finally putting their house on the market again.”
March’s dip follows two straight months of higher sales for the region — a much needed boost after a 28-month slump. Volume in January and February was helped along most likely by the December dip in mortgage rates and an increase in housing supply — mainly newly built dwellings — according to the local Realtors group.
Today, new-construction homes account for 43.5 percent of sales in the Charleston region versus about 25 percent pre-pandemic, O’Neill said.
Also, inventory got a much-needed replenishment, growing 16.8 percent to 3,165 units year over year. The volume further suggests a solid spring and early summer because many of those sellers will also be looking to buy.
“Charleston is just so in demand and everybody wants to keep moving here,” O’Neill said. “I think you’re going to see sales go up in April, May and June. At least in our office, the numbers are just stacked.”
For now, borrowing costs remain elevated but are holding steady. As of April 11, the average 30-year fixed-rate mortgage was 6.88 percent and the average 15-year rate is 6.16 percent — both within about half a percentage point from a year ago, according to Freddie Mac.
At the start of the year it was widely expected that the Federal Reserve would cut its key interest rate three times in 2024, taking it to the 5 percent range this summer. But with the economy going strong as is, the question is no longer when rates will be cut, but rather will they be cut at all?
Home loan costs likely will continue to hover between 6.6 percent and 7 percent until inflation shows convincingly that it’s moving toward the Fed’s 2 percent target rate, said Hannah Jones, Realtor.com’s senior economic research analyst.
“Eager buyers and sellers are hoping to see more favorable housing conditions as the spring selling season kicks off,” she said. “However, mortgage rates have offered little relief as economic data, as measured by both inflation and employment, remains strong.”
O’Neill said he’s surprised that regional home prices haven’t dropped given the rising borrowing costs, but again that goes back to the demand to live in the region and customers growing tired of waiting to make that move.
“Eventually you’re like, yeah, it costs more than I wanted it to, but I just have to move,” he said. “I expected this year for some of that demand to just get on with it.”
