Philadelphia Metro Housing Market Update: September 2023

The Philadelphia metro area's real estate market saw some significant shifts in September 2023, as home prices continued to rise and supply constraints put pressure on buyers. In this blog post, we'll dive into the key findings of the latest market report, providing insights into the median home prices, sales activity, and what to expect in the coming months.

In September 2023, the median home price in the Philadelphia metro area stood at $355,000. While not reaching an all-time high, the year-over-year growth rate was impressive, with prices surging by 7.6%. This surge marks the strongest price growth observed in 2023.

However, the rapid increase in home prices came at a cost to sales activity. Closed sales experienced a notable decline of 21.7% in September 2023, painting a clear picture of the challenges faced by buyers. Furthermore, this trend was also reflected in new pending sales, which declined by 12.0%.

One of the critical factors affecting the Philadelphia housing market is the shortage of available homes. New listings were down 15.1% compared to the same period in the previous year. Active listings have been consistently below 2022 levels for the past five months, resulting in a 12.6% decrease in inventory by the end of September. Notably, while listing activity remains low, there were more new listings entering the market compared to new pending sales. This suggests that potential sellers are holding onto their properties, partly due to locked-in mortgage rates that are significantly lower than the current market rates.

Buyers are facing a challenging landscape, with half of the homes sold in September leaving the market within just 10 days. Additionally, the expectation of mortgage rates reaching 8% in 2023, rather than returning to 6%, is likely to limit future new listings, as sellers opt to maintain their lower rates. Despite these challenges, some buyers from higher-cost areas may be drawn to Philadelphia's relative affordability. This tug-of-war between supply and demand is expected to keep home prices firm, if not continuing to grow, as observed throughout the year. While price growth has been steady across most counties in the Philadelphia metro area, Bucks County reported a slight decrease of 2.2% in median home prices. However, overall, new listings, new pending sales, and closed sales remain significantly lower than the previous year. In several counties, including Bucks, Chester, Delaware, Montgomery, and New Castle, half of the homes sold in September vanished from the market within a week or less, highlighting the quick pace of transactions due to tight supply.

The Philadelphia metro housing market in September 2023 is characterized by rising home prices, limited inventory, and challenging conditions for buyers. As we move forward, it's important for both buyers and sellers to navigate this dynamic market carefully, especially with the uncertainty surrounding mortgage rates. Stay tuned for further updates as we track the evolution of this market in the coming months.