May 2024 Market Update

In our last market update in February, we dubbed 2024 the “year of readjustment” and predicted  this year would bring a gradual increase in transactions, slowly building inventory, stable sales prices and slowly decreasing interest rates. While overall, this prediction has been proven true, I think 2024 may be better named “the year of resiliency.” The Charleston market remains robust. As we conclude the spring market, the number of sales has grown each week and the inventory has slowly built, all while prices increased and interest rates remained higher than anticipated. 

Transactions 

The number of homes going under contract each week has been steadily increasing this spring which has solidified a return to our seasonal “spring market.” Our typical seasonality was ignored mid 2020-mid 2022 during the Covid frenzy. Increasing weekly sales means we have returned to a typical buying season. And while the number of weekly sales is much lower than 2021, it is still a healthy and strong number of transactions for our market. 

Inventory

With the return of the spring market, we have also seen a seasonal build up in inventory. Spring is generally the busiest season as people prepare to make moves while schools are on summer break. The Charleston market’s inventory was eaten up during the Covid buying frenzy and while higher interest rates made sellers reluctant to move. Anecdotally, this spring has been the first time since Covid that our team has had multiple sellers looking to list their current homes and move locally. As inventory has slowly built and interest rates stabilized, sellers are feeling confident in listing and making their next purchase. Although the inventory is slowly starting to recover, we still only have half the homes on the market than we need to match current buying demand.

Pricing

With a large gap between supply and demand remaining, we have seen the median sales price increase steadily again this spring. The median sales price is up 4.8% over 2023 recently returning to our all time market high (set in May of 2022) of $425,000. Until inventory matches demand, we will continue to see rising prices. What encourages us is that this increase feels healthy! We want to see home values continuing to increase at a steady, predictable rate. Home owners can feel confident their investment will continue to grow and buyers don't have to feel disqualified if they need to put their search off for a few months. All of this makes for a more “normal” market.

Interest Rates

So what's going on with the rates? Interest rates have been the pesky outlying variable in the real estate market since mid 2022. As national inflation skyrocketed, the Fed had no choice but to raise interest rates. It is believed that the peak of those rate increases is behind us (reaching a high in November 2023) but still unclear exactly when the first rate decrease will occur. It was thought that April 2024 would be the first official rate cut, but inflation is stubbornly high and the Fed was not comfortable making that April cut. Many are still predicting a rate cut this summer and maybe one more this fall, but that will depend on inflation numbers. The good news is, a rate increase seems very unlikely, and rates are fairly stable around 7%. We believe getting the rate back to 6-6.5% will bring a lot of home sellers and buyers off the fence. If those two rate cuts occur later this year, it could line up for a very busy spring 2025.