Charleston-area home sales nosedived again in January, plunging double digits for the second month in a row and blamed squarely on the longest federal government shutdown in history.
Residential real estate transactions sunk 16 percent last month from a year earlier, according to preliminary data Monday from the Charleston Trident Association of Realtors.
The plummet marks a third straight month of falling home sales. Transactions skidded 17 percent in December after falling 6.4 percent in November. December's decline can be attributed to buyers spooked by the volatile stock market, a fourth interest rate hike in 2018 and the holiday shopping season.
The hesitance and lack of ability to close a deal carried over into the new year as the partial government shutdown lasted for much of January.
“The local impact of the longest government shutdown in history — which ran all the way to Jan. 25 — is here," said Edward Oswald, president of the association. "Without the ability to process some types of loans, and the IRS unable to process financials, some self-employed buyers weren’t able to show a ‘salary’ history and, therefore, were unable to close."
He called the level of uncertainty resulting from a shutdown significant.
"It’s an ongoing concern, as we have just a few days before the next shutdown deadline," Oswald said. "This market has already been feeling the pinch of ongoing low inventory and growing affordability challenges. The federal issues are compounding the challenges we’re facing in our market."
He referred to local permitting restrictions and the threat of building moratoriums restricting the supply of homes.
"It creates an atmosphere that can be very uncertain for buyers and certainly investors,” he said. “Outside of these political issues, our market has been growing steadily for the last several years, so I believe we’ll see a return to ‘normal’ once we see more stability on the political front.”
Last month, 942 homes changed hands throughout the region. The median price rose 2.7 percent, or $7,000, from a year ago to $265,000.
The number of residential listings on the market throughout the region fell to 5,276 as "active" for sale in the Charleston Trident Multiple Listing Service. That's down almost 2 percent from a year earlier.
A healthier number of available homes in the region to keep prices in check is about 6,500, the local Realtors group has previously said.
While the cost to own a home continues to balloon, mortgage rates, up from this time last year, continue to fall slightly from last fall's seven-year highs.
Financier Freddie Mac reported the rate on a 30-year mortgage dipped last week to an average 4.41 percent, while the rate on a 15-year loan slipped to 3.84 percent.
The decline in rates could bode well for those looking to buy a house as the weather warms, according to Freddie Mac's chief economist Sam Khater.
“The U.S. economy remains on solid ground, inflation is contained and the threat of higher short-term rates is fading from view, which has allowed mortgage rates to drift down to their lowest level in 10 months," Khater said.
"This is great news for consumers who will be looking for homes during the upcoming spring home-buying season," he said. "Mortgage rates are essentially similar to a year ago, but today’s buyers have a larger selection of homes and more consumer bargaining power than they did the last few years.”
The Federal Reserve took a wait-and-see approach last month without raising borrowing costs again, signaling a more modest assessment before further rate hikes.
Property information service CoreLogic expects home prices to rise 4.6 percent through December.
"If home-price growth continues to moderate, interest rates remain stable and household incomes rise in 2019, it could help renters and first-time buyers to take the plunge and realize the dream of owning a home,” said Frank Martell, CoreLogic's CEO.
Nationally, home prices climbed 4.7 percent over the past 12 months through December, according to the property information provider.