Home sales in Acadiana fell in March from a year ago, which could be the first signs of a market slowdown amid rising interest rates.
Overall March sales were down 8% in the Acadiana area and 9% in Lafayette Parish from a year ago, according to data from Bill Bacque with Market Scope Consulting.
The declines were the largest in the two-year period since mortgage interest rates fell to historic lows, a move that flooded the market with buyers.
The average rate for a 30-year fixed-rate mortgage was 5% on Friday, according to Freddie Mac. Rates during the pandemic had fallen to nearly 2.5% but could reach 6% by the end of the year, Bacque said.
Pending sales were also down from a year ago, including 12% in Lafayette Parish and 6% in the area. These numbers, Bacque noted, are more indicative of the rise in interest rates of late.
“I think if interest rates continue to rise, we could see ourselves getting back to 2018 (sales) levels,” Bacque said Thursday in an interview with the Acadiana Realtors Association. “It was the first year that we exceeded $1 billion in sales. . We made $1.7 billion last year. That $700 million might just be the fluff that’s in the market that a change might eradicate.”
Other factors that could slow sales this year could be inflation, low home inventory and the rising cost of flood insurance, Bacque said. Flood insurance rates will increase significantly this year for homeowners, and some have already reported rates jumping from $600 to $3,000 or more, according to reports.
“If you’re not familiar with this issue, then fasten your seat belts,” Bacque said. “That will be one of the main issues going forward.”
New construction on the rise: Newly built home sales in Lafayette Parish are already outpacing last year’s record pace through the first quarter of 2022, the data shows.
So far, 287 new builds have been sold through March, just ahead of the 276 sold during the same period in 2021, the data shows. The biggest increase in house constructions came in the southwestern part of the parish, just north of Mauritius, with 57 new constructions, more than double the 21 built last year.
This is a carryover from 2021 in Lafayette Parish, a year in which a record 1,165 homes were built, surpassing the previous record of 1,117 in 2014. It could also be a spillover of activity to Mauritius, the town in the parish of Vermilion whose population has more than doubled. in the recent US census.
The area trailed only the southern half of Youngsville in number of homes built, the data showed. This area, south of LA 92 and Iberia Street, had 78 new constructions, compared to 44 a year ago.
The northern half of Youngsville saw the highest number of home sales with 197, up from 224 a year ago. The section of downtown Lafayette between Johnston and Cameron streets recorded 140 home sales, the second most of the 13 areas in the parish.