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Record sales pace

Builders in Horry County last year beat their record sales pace in 2005 by 7 percent.

New home sales increased 5.5 percent, new condominium sales were up 3 percent and new townhome sales increased 95 percent - despite an insurance crisis and an investor exodus, according to Market Opportunity Research Enterprises in Rocky Mount, N.C.

Strong buyer incentives and far-reaching marketing helped drive sales, analysts said.

Sales of resale homes lagged over 2005, however, dropping 33 percent for condos to 5,412 and 12 percent for single-family homes to 4,916.

The rise in new home sales - without price declines - means the Myrtle Beach market is rebounding better than other coastal markets in the Carolinas, said Bernard Helm, president of MORE, which tracks real estate in the Carolinas.

"That says the market is stronger than people are saying it is," Helm said. "People may not be getting what they want for their homes, but the fact is that prices of those homes are still going up."

New homes are outpacing existing homes because builders have the resources to do better marketing and offer buyer incentives than homeowners, Helm said.

"Resellers do not have the ability or marketing clout to get visibility for their product. They are going to spend the money either creating visibility for their house or they're going to spend that same amount of money in a reduced price," Helm said.

Lot sales are down for the same reason - individual sellers can't market lots the way developers can. The loss of the investor has also made lot sales more difficult, Helm said.

Centex Homes, the Grand Strand's largest builder, says its sales were nearly as strong as 2005. The builder used a host of incentives to attract buyers, but it had a higher cancellation rate last year than 2005, said Ken Balogh, president of the Myrtle Beach division of Centex Homes.

Don Schunk, research economist at Coastal Carolina University, said the new home sales spike shows builder incentives paid off.

"A good sign across the board is what's happening with prices," he said. "For all of 2006 and even in the last few months, we don't see anywhere where prices are falling."

By comparison, home prices are down year-over-year nationally and in major markets in Florida, Schunk said.

"Since home prices are still going up, it's a very good indication that what we saw was a slight correction and not a severe downturn in housing," he said.

As builders see how incentives affect their bottom lines by trimming profits, however, Schunk said he expects them to pull back on the giveaways - spurring buyers to look more at existing homes for good deals.

For builders, the question will be how consumers react to losing the incentives that became an expectation in the last half of 2006. Schunk said auto dealers had the same problem when they tried to get rid of new car sales incentives a few years ago.

"The longer they kept it, the harder it was to take them away. Consumers get used to that very quickly," he said.

For 2007, Helm predicts real estate sales will record a weak first quarter but show some muscle by the third quarter.

While Horry County sales were up, sales weren't quite as good in Brunswick County.

Helm said sales in the Wilmington market are slower than Myrtle Beach, and that may have spilled over into Brunswick County.

Sales for new homes, condos and townhomes dropped 5 percent in Brunswick County to 2,378. Sales of resale homes, condos and townhomes dropped 25 percent to 3,192.

The reason for the discrepancy, again, was marketing, Helm said.

"You do not have a well-organized building community in Brunswick," he said.

Brunswick County also saw some price declines.

The average price of single family homes dropped 9.5 percent to $300,570 in 2006.

But there were signs of a fourth-quarter recovery when average prices climbed 2 percent to $295,271 from $289,700.

"That shows that late in the year there was some strength in the marketplace when average price for the year is down, but coming back up in the fourth quarter. That's music to my ears," Helm said.

Georgetown County saw a similar trend as Horry County with new-home sales up and resale-home sales down.

The area also showed price increases except for a drop in new condo prices.

The median price for new condos in 2006 was $134,900 compared to $149,780 in 2005.