Buoyed by falling interest rates and a healthy job market, Charleston-area home sales bounced back last month after slipping slightly in June.
Residential real estate transactions climbed 6.5 percent in July compared to the same month a year ago, according to preliminary data Monday from the Charleston Trident Association of Realtors.
The uptick in sales comes after a 1.3 percent drop in June and a 3 percent rise in May. For the year, sales are down a scant 0.6 percent.
The rosier home sales report for July would have been even brighter if more were done to bring home-buying opportunities to those households with starting incomes so they can make initial purchases, according to the leader of the Charleston Realtors group.
“Despite historically low unemployment rates and the longest economic expansion in U.S. history, some prospective buyers are still being held up by affordability challenges, as the continued rise of home prices is outpacing income growth," Realtors group CEO Wil Riley said.
"In our region, the $53,000 median household income does not align with a median home price that’s climbing toward $300,000," he said. "Last month, the Fed reduced interest rates by a quarter of a point, which may help some buyers, but it’s time for us as a community to focus on long-term affordability answers that will preserve the health of our real estate market far into the future."
Last month, 1,806 homes changed hands throughout the region at a median price of $277,950, up 4.1 percent, or slightly more than $11,000, over July 2018.
So far this year, 11,021 homes have sold across the region at a median price of $277,500, up 4.7 percent over the first seven months of the year.
The number of residential listings on the market throughout the region stood at 5,634 as "active" for sale in the Charleston Multiple Listing Service in July. That's down 6 percent from a year earlier.
A healthier number of homes in the region to keep prices in check is about 6,500, the group has previously said.
While the cost to own a home continues to rise, mortgage rates continue to fall, boosting interest in home buying.
Home loan financier Freddie Mac's latest report puts the average rate on a 30-year mortgage down significantly from the previous week to an average of 3.60 percent, the lowest since November 2016, while a 15-year loan dipped to an average of 3.05 percent. Both term rates are down nearly 1 percent from this time last year.
"There is a tug of war in the financial markets between weaker business sentiment and consumer sentiment," said Sam Khater, Freddie Mac's chief economist.
"Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall,” Khater said.
Property information service CoreLogic expects home prices to rise 5.2 percent through June 2020.
“Tepid home sales have caused home prices to rise at the slowest pace for the first half of a year since 2011," said CoreLogic economist Frank Nothaft.
"Price growth continues to be faster for lower-priced homes, as first-time buyers and investors are both actively seeking entry-level homes," Nothaft said. "With incomes up and current mortgage rates about 0.8 percentage points below what they were one year ago, home sales should have a better sales pace in the second half of 2019 than a year earlier, leading to a quickening in price growth over the next year.”
With sales brightening from lower interest rates and a full labor market, millennials are no longer sitting on the sidelines.
"However, only about half of recent millennial buyers were satisfied with the number of options of available homes in their market or price range," said Frank Martell, president and CEO of CoreLogic. "Affordable housing continues to be a growing issue. A deeper look at the data shows that 43 percent of those surveyed indicated they couldn’t afford to buy a new home or are concerned they won’t be able to.”
Nationally, home prices climbed 3.4 percent over the past 12 months through June, according to the property information provider.
The local Realtors group also adjusted June's sales figures slightly higher to show 1,932 homes sold at a slightly higher median price of $289,900.