Home sale price drops accelerating across SC markets. Here’s why and what may happen next
Home sales prices have fallen or slowed in growth year-over-year in more South Carolina markets in 2023, recent data shows.
South Carolina saw home prices steadily skyrocket over the last two years as demand rose and inventory shrank. In recent months though, markets have cooled through a combination of shifting consumer purchasing priorities and high interest rates, some industry experts say.
According to the latest South Carolina Realtors statistics, here are the South Carolina housing markets that have had year-over-year median home sales price drops in 2023 from January to through April.
April
- Orangeburg-Bamburg market: -0.6%
- Greenwood: -4.0%
- Piedmont Regional: -4.4%
March
- Aiken: -3.3%
- Orangeburg-Bamburg market: -21%
- February
- Aiken: -2%
February
- Aiken: -2%
January
- Western Upstate: -0.6%
The rest of the SC housing markets
Overall, South Carolina has continued experiencing rising home sale prices this year. However, the rate of the increase has slowed dramatically.
For instance, the year-over-year sales price growth for South Carolina was 2.5% in April, a far cry from the 19.5% gain in April 2022.
“This is a result of a pullback in housing demand, which has occurred over the past year,” said Joey Von Nessen, research economist at Moore School of Business at the University of South Carolina. “As the rate of housing price increases has slowed across the state due to this pullback in demand, some individual markets within South Carolina have begun to see minor price declines.”
Why are South Carolina housing markets cooling?
Von Nessen said one reason why home sales prices have dropped or slowed in growth is because consumers are in the process of shifting their purchasing behavior away from the goods market, including housing, and to the services market.
“This reflects a readjustment phase following a period in 2020 and 2021 in which consumer spending pivoted heavily toward the goods market,” Von Nessen said. “This was the result of social distancing that limited the number of services purchased – people were not, for example, going out to eat or going on vacation.”
The other main reason for the housing market changes has been because home prices and interest rates have risen so high that far fewer average buyers can afford homes, Von Nessen said.
“The Federal Reserve has raised interest rates 10 times since March of 2022 in an effort to reduce inflation,” he said. “This has caused mortgage interest rates to nearly double over approximately the same time period.”
The near future of the South Carolina housing market
Moving into summer, two major factors could determine if the state sees a further reduction in housing demand.
Von Nessen said on factor is if the Federal Reserve will continue to hike interest rates, reducing housing affordability even more. The other factor is if the already high interest rates will slow the economy to a point where unemployment begins to rise.
“Employment growth is the single biggest predictor of housing demand, so any uptick in unemployment this summer would suggest the potential for further housing market adjustments,” Von Nessen said.
Latest South Carolina home sales
Here’s a county-by-county breakdown of home sales in South Carolina as of May, according to Redfin.
This story was originally published May 19, 2023 at 6:00 AM.
