The local housing market continues to boom even as the inventory of homes to sell is dropping quickly. Closings are up 70% on the Waccamaw Neck with 366 homes closed so far this year, up from 245 in the same time period in 2020! Murrells Inlet is up a respectable 38% on the year.
We are now beginning to see the first signs of a pullback in the local pending sales numbers as buyers are having a harder time finding a home to buy. New pending sales is a very accurate indicator of where closed sales numbers will be in the next few months and the data is showing a slow down for the summer season. It is, however, typical for sales to slow in the summer months. But, the last 18 months in the real estate industry have been anything but typical. Also note that a slowdown in sales is not indicative of weaker demand from buyers, buyers are simply having a tougher time finding the right property to purchase.
Interest rates for a 30-year fixed rate mortgage are still in the low 3% range. Inflationary pressures in the overall economy would typically push mortgage rates up, but the FED is continuing its efforts to hold rates down for now. In fact, 10-year U.S. treasury bonds actually dropped over the past few weeks which is generally a sign that rates are headed lower. Low interest rates help to keep affordability of homes in check as median prices soar. An uptick in interest rates will almost certainly slow the pace of sales in the housing market whenever it happens.
As we discuss every month, builders have been slow to fill the demand for new homes as they deal with higher land, labor and materials costs. Lumber prices, which got a lot of headlines over the past few months, are now finally beginning to pull back from all time highs which is good news for builders. But, supply chain shortages from HVAC’s to appliances to paint and siding are continuing to drive up construction costs and build times. So, builders are still not keeping up with demand.
Overall, our local market is very strong. Buyers are relocating here in droves. In contrast to the red-hot market of 2005/2006, there are basically no short-term investors trying to flip properties which is a very good sign. Sales are happening today because people want to move here from somewhere else. Lenders are only lending to qualified borrowers. We really see no scenario where the housing market “crashes” or home values pull back.