Home sales in Columbia and throughout most of South Carolina continued to decline slightly in April, putting a chill on the traditionally strong spring selling season.
Economists had hoped home buying would surge in April after a March thaw from an unusually cold start to the year allowed buyers to start looking for new homes again.
That rebound didn’t come in April. Sales in the Columbia area dropped 3.5 percent to 755 compared to the same month last year, according to the statistics released Thursday by the SC Realtors trade group. Statewide, sales slipped 1.2 percent to 5,430.
Coastal areas fared best in April, with Beaufort’s sales increasing 32 percent to 129 and Charleston’s sales climbing 9 percent to 1,125. But nine of the 16 regions in the state defined by the Realtors’ group saw sales declines; the other five – besides Beaufort and Charleston – saw just modest increases.
The April home sales report said home prices, however, jumped 4 percent in the Columbia area to $146,640 and 4.8 percent in South Carolina last month to $159,000, suggesting sellers are getting better prices after years of buyers having most of bargaining power.
Since the first of the year, analysts had put forward a slew of possibilities for the sluggish response of the housing market to the slowly recovering national economy: buyers largely were not able to house shop in January and February because of intense cold and ice and snow storms; mortgage rates are up about a percentage point from their historic lows a year ago; and home lending practices continue to be tight.
But sluggish sales for many translate directly to their bottom line, some say.
“What housing really needs is further job and wage growth to support healthy demand levels fueled by new household formations,” the Realtors’ April report stated.
The jobless rate in South Carolina has been falling fast, plunging in March to 5.5 percent for the first time since the Great Recession and dipping well below the national jobless rate. Since September alone, 78,000 people in South Carolina found jobs, the S.C. Department of Employment and Workforce said in March.
Job growth, however, has not yet morphed into a rush to buy new homes. “The type of jobs being created is also important. We’re producing more low-wage jobs as opposed to high-wage jobs,” the report said. “That’s not conducive to increasing the number of potential (home) buyers.”
For the state’s top home builder, Mungo Homes, the Columbia housing market so far this year also has moved “sideways,” according to CEO Steven Mungo.
Some of Mungo’s best-selling neighborhoods in the Columbia area have sold out without immediate plans to replace them, he said, simply because the market had been soft.
“Housing is all about jobs growth,” Mungo said. “If you don’t have a job, you’re not going to buy a house. Columbia has lagged a bit in job growth. We’ve been far outpaced by Charleston and Greenville.”
Given job growth statistics in the Columbia area, Mungo said he is surprised home sales have been as good as reported. Mungo attributes existing home sales in Columbia to what he calls “the largest phantom economy in the state,” meaning that because Columbia is centrally located, is the seat of state government and home to the University of South Carolina, it may have a disproportionate share of people who generate income, are self-employed or work out of their homes, for instance, without showing up in local statistical databases such as unemployment insurance filers or those who have been laid off.
Entry-level buyers are highly challenged right now, Mungo said. The average sales price for a Mungo home this year has been $218,000, he said, on projections the average would be $214,000.
“It’s not so much that we’re selling a lot more big houses than we were, it’s that we’re selling fewer small houses,” Mungo said, “because the people are credit-challenged.”
Mungo Homes builds across South Carolina, in Huntsville, Ala., Raleigh and Wilmington, in North Carolina., and Savannah.
The housing picture Mungo said he sees elsewhere in South Carolina is much different than the Columbia market.
“We could sell as many houses as we wanted to in Charleston if we had adequate lot supply,” Mungo said. “There’s probably a housing shortage in Charleston, if not now, coming very shortly,” Mungo said.
“The jobs are being created faster than we’ve been able to create housing stock. Prices and sales in Charleston are both up in or near double figures for April.
“The inventory there won’t stand that for long. Everybody is trying desperately to get new lots on the ground, but the regulatory process in Charleston is twice as long as it is anywhere else in the state.”
Weak demand in Columbia and other parts of the state is temporary, though, and should not be mistaken for stagnation, the Realtors report said.
Mungo also said he expects sales to brighten. He said he expects tight lending requirements imposed by the government for first-time buyers to be loosened as banks and other investors seek means for better returns on investments.
Mungo also said he expects mortgage interest rates to remain flat for some time. Average rates for a 30-year fixed-rate loan have been hovering just above 4 percent for months.
Meanwhile, some neighborhoods in the Columbia area are seeing improvement and sales could spike in the next couple of months as the Home Builders Association of Greater Columbia wraps up a three-week Tour of Homes this weekend. The tour, held at neighborhoods throughout the region, is designed to showcase to buyers what the new home market has to offer.
Traffic on the tour so far has been brisk at Lexington County’s Saluda River Club, on Corley Mill Road. Sales there have tripled from where they were two years ago, said Brantley Jones, a licensed builder and sales representative for the community. The development is two homes sales ahead of where it was this time last year, which was an exceptional year for sales, he said.
“Some of our sales are from folks that are already living in the neighborhood and they’re just upgrading – building another house in the neighborhood,” said Jones, who has been with Saluda River Club for more than two years.
Lexington also typically has the lowest jobless rates in the state, and many of the neighborhood’s residents work in the area’s stable school system and health care community.
Also, “with the relocation buyers that we have, we capture a good bit of that, which makes us a little bit of a different animal,” Jones said.