Philadelphia Metro Update April 2023

According to the Bright MLS T3 Home Demand Index (HDI), market activity in the Philadelphia metro area has seen a third consecutive monthly gain, with the index at 83 in April. This indicates Slow market conditions, but the index is down from 117 in April 2022, when demand was Moderate. Price growth has slowed, but the pace of home price appreciation is higher in the Philadelphia metro area than in many other regions.

Buyers are facing a limited number of options, and homes are still selling quickly. The forward-looking Home Demand Index suggests that while the housing market is picking up this spring, the typical seasonal bump is smaller this year than it was a year ago. The spring housing market will be more subdued than in the past two years due to low inventory and elevated mortgage rates. There will be variations across local markets, with stronger demand and price growth in some counties and slower activity in others. The housing market is likely to stabilize and gather steam in the second half of 2023.

Closed sales in March 2023 in the Philadelphia region were 21.4% fewer than last year but had a 40.5% jump from February. Year-over-year declines are shrinking but will likely continue through the spring and summer since interest rates did not surpass 6% until September 2022. Median sale price growth is not stopping in the Philadelphia metro, with the median price in March 2023 at $324,995, up 5.5% compared to a year ago. All property types, including attached homes, had higher prices compared to March 2022.

Median days on the market dropped from roughly three weeks in January and February 2023 to 13 days in March. Although not at the single-digit levels seen in spring and summer 2022, the drop in median days on the market indicates competitive times for many buyers. New pending sales in March 2023 in the Philadelphia metro area were 25.4% lower than March 2022 but have grown month-over-month in 2023, as is typical for the first quarter.

Active listings in March 2019 were 22,813, whereas March 2023's figure of 8,889 is 39% of that amount. The most significant deficit is among detached single-family homes on the market. Showing activity in the Philadelphia metro area in March 2023 was lower than a year ago but has improved each month in the first quarter, indicating that demand is picking up for the spring.

In conclusion, while active listings in the Philadelphia metro area have grown since 2022, the supply remains significantly low compared to historical levels. The months of supply metric, which indicates whether a market favors buyers or sellers, reveals that most counties in the Philadelphia metro have one month or less of supply. Philadelphia County stands out with the most months of supply at 3.08 and the highest median days on the market. Overall, the housing market in the Philadelphia metro area continues to favor sellers; however, buyers now possess more leverage than they did a year ago.