Home sales in SC plummet to 4-year low. What COVID has to do with it and what may happen next
South Carolina has had the fewest home sales so far in 2023 since 2019 and and the drop can be traced back in part to the COVID-19 pandemic, some industry experts say.
Home sales in the state fell consistently in the past year as prices spiked, driven in part by changes in spending patterns since the height of the pandemic. And while it appears price jumps have begun to level out, the recent historic collapse of the Silicon Valley Bank in California could trigger a new problem for the South Carolina housing market — a drop in demand and spending, some industry experts say.
According to the latest South Carolina Realtors statistics, 11,101 homes have been sold in the state in 2023 as of the end of February, a 28.4% year-over-year drop in sales. The last time the state had fewer sales over the same period was in 2019 when 10,680 homes were reported sold.
The Piedmont Regional housing market has had the biggest decrease so far this year with 65.7% fewer homes sold as of February compared to a year ago. The Spartanburg housing market saw the smallest dip with a 17.7% decrease.
“We definitely have seen the sales for 2023 return to even more of a normal seasonal pace this year, but are also seeing interest rates impact some sales,” said Morris Lyles of ERA Wilder Realty Inc. and the 2021 South Carolina Realtors president.
Here’s how many homes were sold between January and February in the years from 2019 to 2023.
COVID and rising SC home prices
In contrast to sales, home prices in South Carolina have climbed in 2023 just as they did through 2022, pushing down purchases in the process. The state’s median sales price for 2023 was $302,940 as of the end of February, a 4% year-over-year bump. The state’s median sales price was $199,900 for the same period in 2019.
“Overall in South Carolina the prices have continued to increase with median prices going from $291,303 in 2022 to $302,940 in the same period in 2023 so the demand is still strong and buyers are still choosing to own over renting,” he said. “Overall demand seems to still be strong and we are seeing web traffic and inquiries remaining strong in my company, especially for February and March months. March, April and May will be more telling of what the market is doing.”
Joey Von Nessen, research economist at Moore School of Business at University of South Carolina, said that due to the significant levels of social distancing that followed the onset of the COVID-19 pandemic, household spending patterns shifted significantly from consumer services to consumer goods in 2020 and 2021.
“One of the consequences of this shift was a significant increase in the demand for housing that far outpaced pre-pandemic growth trends,” Von Nessen said. “However, throughout 2022 this unsustainably high demand subsided as consumer spending began shifting back toward consumer services and as interest rates increased, which has made the cost of buying a home more expensive.”
Von Nessen added that as the market readjusts, the expectation is for total sales activity to approach pre-pandemic levels.
“So it is no surprise that recent sales activity is now generally comparable to what we observed in 2019,” he said.
What’s next for SC housing market?
Like Lyles, Von Nessen sees home sales prices possibly remaining high in the near term.
“As overall demand has subsided over the last year, the rate of price increases in many markets has also lessened,” Von Nessen said. “However, low housing inventory has nevertheless kept upward pressure on prices despite this lower demand.”
But the collapse of Silicon Valley Bank — the second-biggest bank failure in U.S. history — though it happened on the other side of the U.S. and did not involve housing markets, could eventually cause ripples in South Carolina that may hurt home buying and sales, Von Nessen said.
“One possible effect of the SVB collapse is that it could change consumer confidence levels,” Von Nessen said. “To the extent that the collapse makes consumers more concerned about overall economic conditions and a potential recession this year, it could negatively impact consumer spending, including the demand for housing.”
What about the national level?
On the national level, housing markets overall have seen a price drop and sales slightly increase this year.
According to redfin.com, the median U.S. home sale price fell 1.2% in February to $386,721. It’s the first year-over-year decline since 2012.
Redfin notes that U.S. home sales continued to level off in February after plunging in the second half of 2022. Home buying rose 0.3% in February from the month before and were down 26% from a year ago, which is an improvement from the 35.5% record annual drop in the fall, Redfin states.
“Buyers are struggling because higher interest rates have increased the cost of homeownership, and sellers are struggling because they’re still adjusting to the fact that their home won’t sell for what their neighbor’s did a year ago,” Andrew Vallejo, a Redfin real estate agent in Austin, TX, said in a Redfin report.
SC home sales breakdown
Here’s how many homes have been sold in each South Carolina market in 2023 as of February.
Central Carolina: 41
Charleston Trident: 2,240
Cherokee County: 41
Coastal Carolinas: 2,054
Greater Augusta: 977
Greater Columbia: 1,479
Greater Greenville: 1,799
Hilton Head area: 580
Pee Dee: 300
Piedmont Regional: 370
Sumter/Clarendon County: 222
Western Upstate: 675
Below is an interactive map that shows how many homes have been sold in the last couple of weeks in each county. The map uses data compiled by Redfin.