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Pendings Have Plummeted! | The Lafayette Market Update
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Pendings in Lafayette parish have plummeted 15% in January. Is the market finally cooling off?
Lafayette Parish has experienced a 15% Decrease in Pending Sales in January, year over year.
So it looks like although we had a record-breaking January in Closings and Volume, the Pendings seemed to have cooled off. Meaning we should expect slightly fewer closings in the next 30 to 60 days compared to last year. However, when you are looking at the number of pendings for January, you can see we are well above the average number of pendings going back to 2012. Indicating we should have an outstanding first quarter equal to or better than the first quarter of 2021.
And although pendings have cooled, Demand continues to hold strong. In fact, the MLS reported that over 19% of homes sold in January were above list price. This is double the average over the last decade. Indicating a very strong demand for housing and a short supply of homes for sale.
And as always we like to keep an eye on what is happening with interest rates. Now in order to predict where the interest rates will go, you have to look at the 10-year Treasury Yield. Although the Fed does not directly control interest rates, they do control the 10-year Treasury Yield.
Now by raising or lowering the Treasury yield, they hope to influence the Interest rates. In other words, The treasury yield and interest rates have a symbiotic relationship. When the treasury yield goes up, so do the interest rates. You can see in this chart that the 10-year treasury yield has Skyrocketed, in the last 3 months, from 1.43 on Dec 1st, 2021 to 1.81 on February 1st. So we can expect interest rates to follow.
In this chart, you can really see the relationship between the mortgage rate and the 10 – year treasury yield over the last 50 years going back to the 1970s. Over the last 5 decades, the average spread between the 10-year treasury yield and the interest rates is around 1.7
We also look to the experts. We average the predictions of Freddie Mac, Fannie Mae, the Mortgage broker association, and the National Association of Realtors, to come up with what to expect moving forward. As you can see, we expect the Rates to increase to above 3.75% in the 4th quarter of 2022.
Is this bad? Sometimes we need some perspective. Looking back at the last 5 decades, you can see there has never been a better time to buy than now. But we do expect the interest rates to rise.
I hope you found this information valuable. If you are interested in buying or selling real estate, I would love to help.
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