Homes sales in Acadiana and the amount of money spent on home purchases dipped in April, which indicates the two years of a flurry of sales may be reaching its end.
Sales were down 16% in the region and 21% in Lafayette Parish while the amount of money spent in those transactions were down 8.5% in the region and 7.6% in Lafayette Parish, according to data released by Bill Bacque with Market Scope Consulting. Pending sales dropped 10.6% in the region and 19% in Lafayette Parish, data shows.
Interest rates have risen in recent months and may continue to do so until the end of the year. The average rate for a 30-year fixed mortgage rate as of Monday was 5.54%, according to bankrate.com. That’s up 13 basis points from a week ago and about double the rate during the pandemic when rates dropped below 3%.
Having a rate just above 5% won’t bring the market to a halt, Bacque noted. It’s how fast rates are rising. From January to April, rates have increased at the fastest pace since 1994.
“The expectation was that our overheated residential market would begin to cool down,” Bacque wrote. “With us at now dead center in the traditionally hot spring and summer sales months, signs of that expected cooling are starting to appear. It’s how fast (interest rates) have risen that is giving many buyers pause in their frenzied housing search. ”
Other factors are to blame, including inventory. The flood of buyers made finding properties difficult, but now in April the number of new listings had significant drops: 12% in the region but 25% in Lafayette Parish.
The number of new construction homes sold was down 12% from last year, putting the construction pace behind last year’s record-setting year for new builds. Pending sales of new builds in Lafayette Parish were down almost 40% compared to last year with the number of new builds sold so far this year down 16%.
“Even without the rapid rise in mortgage rates, many prognosticators predicted that excess housing demand would begin to diminish in 2022,” Bacque wrote. “Interest rate gains will only add to the demand drop.”
The drops are following nationwide trends, according to reports from national real estate agency Redfin. That agency reported 15% of sellers in April have had to drop the price of their homes, the highest number in six months, while the typical monthly mortgage payment for buyers has shot up 42% during that same period.
“Homebuyers continue to be squeezed in almost every way possible, which is causing some to take a step back from the market,” said Redfin chief economist Daryl Fairweather.
Sale prices, however, remain ahead of last year’s pace as the prices have continued to rise. The average sale price for a home last month was $ 243,456 in the region and $ 268,004 in Lafayette Parish, both up 9% from a year ago.