CHARLESTON - The sales momentum that had been slowly lifting local home sales came to a jarring halt in July, raising questions about the long-awaited recovery of the real estate market.
Monthly home sales data released Tuesday show that 643 area homes sold during July, a striking drop-off from the 1,022 transactions recorded in June.
The 37 percent month-to-month decline followed the expiration of the $8,000 federal tax credit for first-time home buyers, which applied to only a few July sales.
Local real estate agents say they were expecting a drop in sales last month, but they're struggling to grasp how long the dip will last and whether the momentum generated by the 16-month tax credit will return quickly.
"I believe the tax credit has given (the economic) healing some time to take place," said Jeremy Willits, president of the Charleston Trident Association of Realtors. "But the fact is, we're not done with these issues."
Housing sales are a major force in the economy, spreading money to agents, closing attorneys and home inspectors. And beyond that, sales typically drive business for moving companies, hardware stores and furniture outlets.
But Willits said buyers remain on edge about the economy.
"The thing we're seeking out there is stability. That's what the consumer wants," said Willits, a commercial real estate agent with Mount Pleasant-based Grubb Ellis WRS. "And I don't think consumers are convinced that we've turned the corner on this."
By all accounts, it's an ideal time to be a buyer. Nationally, interest rates on mortgages are near all-time lows, slipping below 4 percent for some 15-year home loans. And, locally at least, purchasers have plenty of choices.
Realtors association data show that prospective buyers are scheduling times to look at homes just as frequently as they did before the tax credit expired.
"It's been pretty much unaffected, which is puzzling," Willits said of local showings. "You'd think those would drop off."
Wells Fargo economist Anika Kahn said the housing market's recovery hinges on a key economic indicator: unemployment. South Carolina's jobless rate was 10.7 percent in June, one of the highest in the country. And without substantial job growth, the housing market will likely continue to suffer.
"The weak labor market is going to continue to put pressure on the housing market," Khan said. "Home prices will continue to decline because the bottom line is you'll get more foreclosure and delinquencies."
For sellers, other indicators are more worrisome, such as the number of homes available and the downward direction of the region's monthly median home price.
The Charleston area's inventory of properties on the market remained high -- now at 9,737 homes -- even as the tax-credit incentive sent sales activity surging. Such a large number of homes on the market pushes home prices down as sellers compete for a limited number of buyers.
The association also includes in its data a few properties outside of but adjacent to the tri-county area.
The monthly median home price gradually dropped while the tax credit was in effect, though July's price jumped to $196,573.
That's the highest price in two years, but association data keepers said the increase occurred because higher priced homes -- ones in the $300,000 to $400,000 range -- changed hands. Earlier months showed more sales activity in lower price ranges.
Reach Katy Stech at 937-5549 or firstname.lastname@example.org.