Higher prices aren't scaring off buyers as home sales throughout the Charleston area climbed by double digits again in February.
Residential real estate transactions soared 25 percent during what normally is a slow house-hunting period compared to a year ago, right before the COVID-19 pandemic sent the market into a brief tailspin.
According to preliminary figures released by the Charleston Trident Association of Realtors on March 10, the increase follows a 22 percent surge in January and a record-breaking 2020, when low mortgage rates helped fuel nearly 22,000 purchases.
In February, 1,654 homes changed hands throughout the Charleston area at a median price of $329,334, which was up almost 12 percent from a year earlier.
For the first two months of the year, volume rose about 24 percent to 3,090 sales, with the median price gaining 12 percent to $324,180.
The inventory of available homes tumbled again in February, with 1,739 listed as "active" on the CHS Regional MLS. That's down almost 68 percent during the past 12 months.
"We’ve reached an unprecedented low in terms of available housing in our region," said Rusty Hughes, 2021 president of the association. "We have just under a month’s worth of inventory available, and the market continues to be extremely competitive for buyers."
Hughes doesn't expect a slowdown in demand, but the region could see an uptick in available homes during the spring and summer as more sellers get vaccinated and become willing to show their homes.
Homes are selling nearly 35 percent faster than last year, the association said. Because of the growing disconnect between supply and demand, the average time a residential property stays on the market is down to 41 days, compared to 69 days in February 2020.
The cost of borrowing is still relatively cheap, but mortgage interest rates have been ticking up since hitting a low point in January.
Home loan financier Freddie Mac reported the average rate on a 30-year, fixed-rate loan jumped to 3.05 percent this week, up from 2.73 percent a month ago. One year ago, it was 3.36 percent.
The average rate on a 15-year mortgage rose to 2.38 percent. One month ago, the shorter-term rate was 2.19 percent and one year ago it stood at 2.77 percent.
Driving the uptick in interest rates are optimism for more hiring as more people are vaccinated and the $1.9 trillion federal stimulus plan that President Joe Biden signed Thursday, according to Sam Khater, Freddie Mac's chief economist.
"Even as rates rise modestly, the housing market remains healthy on the cusp of spring homebuying season," Khater said. "Homebuyer demand is strong and, for homeowners who have not refinanced but are looking to do so, they have not yet lost the opportunity."
While home prices continue to spiral higher throughout the Charleston region, property information service CoreLogic predicts they will increase 3.3 percent nationally by January 2022.
Higher home prices and borrowing costs will further hamper the ability of those trying to make an initial home purchase, said Frank Nothaft, CoreLogic's chief economist.
"When interest rates rise, the affordability squeeze for first-time buyers will become even more of a challenge," Nothaft said.
He cited a low stock of lower-cost houses and rising prices for those that are available, erasing most of the benefits of still-low interest rates.
The Charleston Realtors group adjusted its home sales total slightly higher for January to 1,436 transactions. The median price was unchanged at $314,900.