The Philadelphia metro area's housing market has exhibited interesting trends and shifts over the past year, indicating both stability and subtle changes in buyer behavior, inventory levels, and pricing. This blog post will analyze the key aspects of the market as reported in the July 2024 Housing Market Report, providing insights into the current state and future outlook of real estate in the region.

Overview of the Philadelphia Metro Housing Market

Stable Sales Volume with Anticipated Growth

In the Philadelphia metro area, home sales in 2024 have remained relatively stable compared to the previous year. Despite this, market activity is expected to increase in the latter half of the year due to falling mortgage rates, which are predicted to attract both more buyers and sellers. This is likely to create a more dynamic market environment where buyers may gain slightly more leverage, although home prices are still expected to remain stable or rise in most local markets.

Increase in Inventory

One of the most notable trends is the increase in inventory across the region. At the end of July 2024, active listings were up by 17.9% year-over-year, marking the fourth consecutive month of inventory growth. This surge in listings, particularly in the suburbs, has pushed the months of supply up to 2.04—the first time it has exceeded two months since late 2020.

Despite this increase in inventory, the market remains competitive, with half of all homes sold in July being on the market for 10 days or less. This suggests that while there are more homes available, demand is still strong, contributing to continued price appreciation.

Key Market Statistics

The following table summarizes some of the key statistics from July 2024, compared to the same period in 2023:

These statistics illustrate a market that, while growing in inventory, continues to see rising prices and quick sales, indicative of robust demand.

Market Dynamics by County

The dynamics of the housing market vary across the different counties within the Philadelphia metro area. Here are some highlights:

• Philadelphia County, PA: Closed sales increased by 8.7%, with a median sold price remaining steady at $280,000. The median days on market decreased by one day, indicating a quick turnover despite stable prices.

• Montgomery County, PA: Experienced a 14.6% increase in closed sales with a slight increase in the median sold price by 0.5%, reaching $452,250. The county saw homes selling quickly, with a median of 7 days on the market.

• Chester County, PA: Notable for a 12.6% increase in closed sales and a small increase in the median price by 1.2%. Homes in Chester County were among the fastest-selling in the region, with a median of just 5 days on the market.

• Delaware County, PA: This county saw a significant 18.2% increase in closed sales and a 15.2% increase in the median sold price, which rose to $380,000. The median days on market remained at 7 days.

• Burlington County, NJ: Posted a 10.3% increase in closed sales and a 9.7% rise in the median sold price to $395,000, with homes spending a median of 13 days on the market.

• Mercer County, NJ: Saw the largest increase in closed sales at 22.9%, with the median sold price increasing by 9.0% to $469,950. Homes in Mercer County were on the market for a median of 12 days.

Analysis of Market Trends

Rising Prices Amidst Increasing Inventory

The Philadelphia metro area continues to experience rising home prices, despite the increase in inventory. The median sold price in July 2024 was $395,000, a 7.0% increase from the previous year. This suggests that while more homes are available, the demand remains strong enough to keep prices on an upward trajectory.

This trend is particularly evident in the suburbs, where inventory gains have been most pronounced. Suburban areas such as Bucks County, PA, and Mercer County, NJ, saw some of the largest increases in inventory, but this has not led to a decrease in prices. Instead, these areas continue to see price increases, reflecting strong demand for suburban homes.

Quick Sales Indicate Competitive Market

The median days on market across the region was just 10 days in July 2024, only one day longer than the previous year. This quick turnover time highlights the competitive nature of the market, where well-priced homes are quickly snapped up by eager buyers. This is consistent across various counties, with some areas like Chester County, PA, seeing homes sell in as little as 5 days.

Future Outlook: What to Expect in the Coming Months

Looking ahead, the Philadelphia metro housing market is expected to see increased activity in the coming months, driven by falling mortgage rates. This will likely bring more buyers into the market, increasing competition and potentially leading to further price increases.

However, the growing inventory could provide some relief to buyers, offering more choices and possibly leading to a slight moderation in the pace of price growth. The suburbs are expected to continue seeing the largest inventory gains, which may help ease the pressure on buyers in these areas.

Visualizing the Data

To better understand these trends, let's look at some visual representations of the data throughout 2024 so far.

Chart 1: Closed Sales

The number of closed sales has exhibited a steady upward trend throughout 2024, closely mirroring the levels seen in 2023. However, it's important to note that these figures remain significantly lower compared to previous years.

Chart 2: New Listings

The relatively modest number of closed sales can largely be attributed to a persistent shortage of new listings entering the market. This scarcity of fresh inventory is a key factor driving market dynamics this year.

Chart 3: Median Sold Price

The median sold price in 2024 has reached a six-year high, underscoring the fact that properties in the Philadelphia area are commanding higher prices than ever before. This trend highlights the strong demand and competitive nature of the current market.

Chart 4: Median Days on Market

In addition to fetching higher prices, homes are selling at a brisk pace. The median days on market have remained consistently low, indicating that buyers are acting quickly to secure available properties.

Chart 5: Mortgage Rate

Despite the attractive conditions for sellers—marked by minimal competition, record-high median sale prices, and swift market turnaround times—buyers are showing caution. The primary reason for this hesitancy is the burden of exceptionally high mortgage interest rates, which have tempered buyer enthusiasm despite the favorable market environment for sellers.

Conclusion

The Philadelphia metro housing market in July 2024 presents a picture of stability with underlying dynamics that suggest continued competitiveness. The rise in inventory, particularly in the suburbs, coupled with stable and rising prices, indicates a healthy market with strong demand. Buyers should be prepared for quick sales and potentially higher prices, while sellers can take advantage of the increasing number of buyers entering the market due to falling mortgage rates.

As we move further into the year, it will be crucial to monitor how these trends evolve, especially with regard to how inventory levels and mortgage rates impact buyer behavior and pricing dynamics. The Philadelphia metro area remains a vibrant and attractive market for both buyers and sellers, with opportunities and challenges that reflect the broader trends in the U.S. housing market.

Data and insights are based on the July 2024 Housing Market Report for the Philadelphia metro area, prepared by Bright MLS.