First-time home buyers scrambling for an $8,000 tax credit pushed Columbia-area home sales in September into positive territory for the first time in more than two years.
Sales rose 2.4 percent compared with the same month in 2008, according to figures from the Consolidated Multiple Listing Service, which tracks home sales in the Columbia area. The median home price stayed flat at $135,000.
But the recovery is fragile and hinges on government programs and lending practices, industry experts said.
The last time the Columbia area gained in year-over-year home sales was in August 2007, when they increased 3 percent. Sales have been in a downward spiral since, falling 20.6 percent in 2008 and 18.5 percent during the first nine months of this year.
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"I feel like we've found 10 buckets of water in the desert. We may have to be drinking those buckets for a while," said Jay Graham, who had his second-best sales month in his 31-year history as a real estate agent in Columbia.
As the still shaky economy attempts to recover, several factors are looming that could derail stability in the housing market, said Don Schunk, a research economist at Coastal Carolina University.
Those include the potential end to the tax credit for new home buyers, a proposal to increase the down payment for Federal Housing Administration loans and a potentially sharp increase in interest rates.
The tax credit is set to end Nov. 30, but Congress is debating whether to extend it and expand it to include all home buyers.
"It's crucial that it be extended," said Earl McLeod, chief executive of the Home Builders Association of Greater Columbia. He is asking all his members to contact their congressional representatives and ask for support.
Without it, the numbers will go back down and South Carolina's jobless rate - the sixth-worst in the nation - will remain high.
"We're not going to create jobs in this country until we can get this housing industry back on track," McLeod said.
Lending standards, which tightened sharply as the economy sank in the past couple of years to the worst it has been since the Great Depression, will have to ease for builders and buyers to get a recovery started in earnest, he said.
Another factor to watch is a proposal to increase the down payment minimum for FHA loans. Those loans have gained popularity during the downturn because of a 3.5 percent down payment and low interest rates. But increasing the down payment would deter some buyers, Graham said.
"That will cut a spigot off," he said.
Mortgage rates, which have been hovering at historic lows in recent months, also could jump up sharply at the end of the year or early next year, Schunk said.
The Federal Reserve has been buying mortgage-backed securities to try to stimulate the economy, but money for the program likely will run out soon, he said. If the private sector doesn't start buying them, interest rates will climb, he said.
Still, he said, it would be hard for home sales to get much lower in Columbia because there are still people moving into the community and others who need to sell their homes to move into bigger or smaller spaces.
With the hit home sales already have taken, "We quite clearly are sitting at the bottom of this cycle," Schunk said.
It will take time to see if the positive housing numbers continue, though, said Graham, who said we will not see the same highs as the peak years of 2005-2007.
"I don't think we're out of the woods, but in the same breath, the demand for housing will never go away," he said.
Schunk said it's OK to be cautiously optimistic about the positive numbers. But he warned: "Heavy on the caution."