Pending Home Sales at the End of 2022

 December 2022 ended the year with an increase in pending home sales. This was the first increase seen in the housing market since May. Those in the industry believe that the mortgage rates were what enticed the buyers.

The pending sales index also went up 2.5% from November to December. The pending sales index is determined by signed contracts to buy a home which is different from existing home sales. The pending sales index is released by the National Association of Realtors (NAR). This is good news, but it is still down 33.8% from the same time in 2021.

“This recent low point in home sales activity is likely over,” said Lawrence Yun, NAR chief economist. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

The Northeast was down 6.5% from November and the Midwest was down 0.3%. All other regions saw an increase with the West being the highest at 6.4%.

“The new normal for mortgage rates will likely be in the 5.5% to 6.5% range,” Yun predicted. “Job gains will steadily become important in driving local home-sales markets. The South, in particular, is set to outperform the rest of the country, thanks primarily to better job market conditions in this part of the country.”

Buyers are out there and are actively searching for a home. “Mortgage applications have been trending higher alongside lower rates, pending home sales are up, and builder confidence increased in January,” Kushi said. “Interested buyers are out there. From a financial perspective, the decision to buy a home comes down to a payment-to-paycheck calculation, and lower rates may help to reduce the mortgage payment while higher incomes can increase one’s monthly paycheck.”

There is still the challenge of affordability. “Though mortgage rates fell as low as 6.27% in December, down 0.8 percentage points from November’s high, home prices remained elevated, up 8.4% compared to the previous year,” she said.

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The Current New Orleans Housing Market

 Many buyers have become very frustrated with the housing market within the past two years.  Buyers are in crazy bidding wars making it hard to find a home. One home buyer, who has a price range of $400,000 to $450,000, is surprisingly being outbid the last several attempts and purchasing a home. 

“There is not a lot of property on the market that is viable and when they do come up, they sell within a matter of days.  I even offered all cash, full asking price recently and it got bought out from under me,”  says a current renter.

New Orleans and the surrounding neighborhoods have seen their share of quick home sales and high bids on properties.  This scenario has been the same whether a homebuyer is purchasing a starter home or a luxury home.  Professionals in the industry say there are many determining factors that say a change is ahead.  In 2021 a 30-year mortgage was at 3% while current rates are averaging around 6.3%.  The higher monthly payment cost coupled with the rising inflation is making buying power weaker.  The U.S. inflation has climbed above 8% which was around 5% this time last year.

All of these occurrences have caused a slump in the number of home sales.  In fact, the New Orleans metro area which includes nine parishes, is seeing a 10% decrease in the number of home sales compared to the home sales of the same time last year.  This is also confirmed by the number of homes on the market.  The market is up 14% compared to last year but the sales are down from last year.  Currently, we are also increasing the months’ supply of inventory from 2 months to 3 months.

Even though the market is becoming less and less of a seller’s market, it is still not seeing the sales.  The most demand seen is in Mid-City, Uptown, parts of the Bywater and Old Metairie.  “It’s probably the strangest housing market I’ve seen in 20 years. Some houses now are sitting for 30 to 60 days, and offers fly off the market overnight with multiple offers. It’s house by house, block by block, and it doesn’t make a lot of sense,” said Craig Mirambell, a Metairie area broker.

“Anything that is well priced, realistically priced, goes fast.  Some of the frenzy has died down.  But anything well priced will sell,” says Bron Hebert, a realtor with Francher Perrin Group.

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