The first-time home buyer tax credit pushed many South Carolinians into new homes last month, bringing hope the real estate market could be headed for a rebound.
In August, for the first time in almost two years, the Midlands and the state saw only single-digit declines in home sales, the S.C. Realtors trade group reported Thursday.
Sales dropped 6.5 percent in the Columbia area, compared with August 2008 figures. Statewide, the number of homes sold fell 9.4 percent. Those are the smallest declines since November 2007, when sales still were showing gains.
Along the coast, Myrtle Beach and Hilton Head saw big jumps in sales in August, but prices eroded.
"There are lots of good indicators for the first time in a long time," said Nick Kremydas, chief executive of S.C. Realtors. Agents "are starting to believe that there's a light at the end of the tunnel."
The median home price in Columbia was down less than a percentage point to $147,000 for August. The state's median price fell 4.7 percent to $147,000.
Myrtle Beach's home sales rose 18.3 percent, but median prices fell 11.5 percent. Hilton Head saw a 31.3 percent jump in sales but a 21.8 percent decline in median price. The state's 13 other regions all reported declines in sales.
Despite some positive numbers, Kremydas is not convinced the worst is over. That is because the federal tax credit is slated to end, the state's jobless rate remains among the highest in the nation and a second wave of foreclosures is predicted.
The federal tax credit - up to $8,000 for first-time buyers - ends Nov. 30 unless Congress votes to extend it.
Nearly 22,000 people in South Carolina have filed for the credit so far, according the Internal Revenue Service. Those people bought a home in 2008.
Columbia real estate agent Jay Graham said the credit has been a big boost for the market.
"It's like finding a bucket of water in the middle of the dessert," he said.
Graham said he hasn't been this busy since 2007, adding he has four contracts set to close in the next month for new homes.
However, he said the end of the tax credit could mean fewer sales, particularly if the state's jobless rate - currently 11.5 percent - remains high.
Graham estimated at least a quarter of home sales in the $250,000-and-under range were to people buying because they could get the credit.
"We hear it might be extended; we hear it might not. Who knows?" Graham said. "But right now, it feels OK."
Kremydas worries that a new wave of foreclosures in the coming months could trip up home sales and prices.
Homeowners who got help with their mortgages but still can't afford to pay them could be losing their homes soon, he said. Also, investors along the coast who managed to hang on to rentals through the summer might not be able to pay the bills now.
Kremydas said some economists predict a surge in sales next year. But that could be overly optimistic, particularly if the tax credit ends.
"We'll see just how resilient the market is and what kind of recovery we're looking at," he said.
Graham said sales aren't likely to return to the peak days of 2006 and 2007 anytime soon.
"We're nowhere near out of it," he said.
"If we could just keep it where it's at, I'd sign on for that."