As the Charlotte housing market continues to be troubled by a low supply of homes, home sales saw a major drop last month.
Home sales in the Charlotte region fell by 6.1% in June from the previous year, according to data from the Carolina Multiple Listing Services released Thursday. It’s a steep decline for what is typically one of the busiest months of the year in the market.
The local Realtors association offered some caution, however. “One month of sales declines doesn’t necessarily point to a trend,” Brenda Hayden, president of the Charlotte Regional Realtor Association/CarolinaMLS, said in the release.
The drop coincides with a trend that has been vexing the Charlotte market for years: a shortage of homes, which drives up prices. Inventory fell 14% in June from the previous year, to around a 2.3-month supply of homes.
Experts say a balanced market should have around a six-month supply. The average sales price rose 7.1%, to $323,316.
Jonathan Osman, a broker and owner of Tryon Realty Partners, said higher prices are holding both buyers and sellers back.
“(Sellers) know that they could sell today and get what they want or a little bit more than they expect,” he said. “But where are they gonna go?”
A continued trend
The tight housing market is having a major impact on the availability of affordable homes in the region.
In every year prior to 2014, 35% of all homes sold were priced at $150,000 or less, according to a UNC Charlotte report released in February. Four years later, less than 15% of homes were sold in that price range.
One reason there are so few low-priced homes, Osman said, is because investment companies have been buying them up at a rapid pace. A 2017 Observer analysis found that out-of-state companies like Tricon American Homes, American Homes 4 Rent and Invitation Homes have bought more than 10,000 houses across the Charlotte region in recent years.
Eventually though, Osman said, the companies will want to sell those homes. “They’re sitting on gold mines,” he said.
The region also isn’t building enough homes to keep up with the demand.
The UNCC study found that while the city’s population has grown by about 2% per year since 2007, the total number of housing units has increased by just 1.3%.
Higher costs of construction are holding back many homebuilders. According to housing market research firm Metrostudy, Charlotte has the lowest inventory of new housing out of any of the 36 cities it surveys across the country.
Still, earlier this year, signs pointed to a possible moderation in the market: after declining for 11 months, year-over-year home sales were essentially flat in April, and again in May.
And there’s still some positive news for the year: the MLS data showed that sales in the first six months of 2019 are slightly higher than the same period last year.