Housing availability showed some late signs of improvement in Louisiana in 2024, but overall stress continues to persist for would-be buyers with a lack of affordability and uncertainty around interest rates and insurance premiums, according to market data and industry insiders. Last year began with inventory on the rise and average mortgage rates falling from a 24-year high of around 8% in October 2023 to roughly 6.4% in January 2024, according to Freddie Mac. However, a strong U.S. economy continued to place upward pressure on mortgage rates, affecting housing affordability. The Louisiana Realtors Association summarized the market activity in its 2024 annual analysis published Monday, noting mortgage rates climbed back up above 7% in April and remained elevated through the spring and summer, causing buyers to pull back during the months that are usually the most active for the real estate market. By September, the Federal Reserve began cutting benchmark rates, lowering the cost of borrowing and drawing some prospective home buyers back to the market. This led home sales to pick back up in the fourth quarter, but it wasn’t quite enough to make up for the mid-year slump. Data from Louisiana Realtors indicates the total number of homes sold statewide in 2024 was 38,450, a 2.6% drop from the previous year. Still, the median sales price of those homes was 2.1% higher, returning to its 2022 level of $245,000. Housing costs across the nation began to skyrocket in 2021 and 2022, driven largely by low inventory, low interest rates and high pandemic-era rent prices. Current listing prices remain high in large part because of the lack of supply and the general “stickiness” of home values that prevents them from falling. “Housing values rarely actually go down,” said Alí Bustamante, an economist with the University of New Orleans who leads its Institute for Economic Development & Real Estate Research. Measurements of the housing inventory in Louisiana, including both the number of homes available for sale and the number of months it would take to sell all the homes listed on the market, fell slightly from 2023. Oji Alexander, a developer who runs one of New Orleans’ largest affordable housing nonprofits, People’s Housing+, said low inventory combined with high interest rates and record high property insurance premiums are hampering affordability. Other big factors affect housing affordability in Louisiana, said Monique Blossom, a policy director for the Louisiana Fair Housing Action Center. They include its poverty rate and income inequality, both of which are among the highest in the country. Almost 19% of Louisiana residents reported income below $31,200, the federal poverty line for a family of four last year. Additionally, the state faces growing environmental risks that are increasing insurance premiums and deterring some home buyers, she said. “I think the combination of rising insurance rates, lack of supply, as well as completely stagnant wages and natural disasters play into a perfect storm for an affordability crisis,” Blossom said. Louisiana has lagged behind most other states in its economic recovery from the COVID-19 pandemic. The state’s housing affordability index, which measures whether a family can afford a mortgage on a typical home, fell 4.2% from 2023, according to Louisiana Realtors. Looking further back in time at the index reveals affordability has worsened 29% since 2021. Alexander estimates his company’s prospective buyer pool has shrunk by almost a fourth over the past three years due to the affordability crisis. The National Fair Housing Coalition estimates Louisiana has a shortage of nearly 108,000 rental units for people whose incomes are at or below the federal poverty guideline. There are some indicators that signal possible signs of improvement in affordability, but it’s unclear if they can be sustained over the longer term. Those include the number of new residential building permits issued across Louisiana, which as of November was on track to surpass 2023’s total by nearly 4%, according to data from the U.S. Census Bureau. December’s data has yet to be released. The number of new listings across the state also increased 2.7% from 2023, which was the first uptick recorded since 2021, according to data from Louisiana Realtors. Additionally, most of the market’s other performance indicators, though down from 2023, were still improvements from the housing crunch’s low point of 2022. Whether they will last remains to be seen. Investors recently tempered their expectations for the lending market over the next 12 months. Last month, the Federal Reserve revised its plan for interest rate cuts for 2025, signaling just two quarter-point reductions instead of the four it had initially predicted. The revision is the result of stronger employment gains than many expected. “The truth is there’s a lot of uncertainty in the market,” Alexander said. “There’s a lot of uncertainty around what inflation might look like and what interest rates might look like with the new administration.” President-elect Donald Trump has promised to institute tariffs on a wide range of foreign goods, which could cause prices of certain construction materials to increase. Additionally, Trump’s promise to deport millions of immigrants could lead to a shortage of labor in housing construction unless he grants waivers for the industry. Mortgage rates are expected to stay within the 6% to 7% range this year, which is expected to spur an increase in existing-home sales along with a moderate increase in home prices, according to the Louisiana Realtors analysis. Alexander said his organization, which completed 14 housing developments last year, has 28 more currently nearing completion. “We’ve got a long road ahead of us,” he said. “It’s a mountain…[but] we don’t have any intention of slowing down or stopping production.”