Potential homebuyers across the state had about 36,839 homes on the market to choose from in October 2023, according to the most recent data available from the Pennsylvania Association of Realtors released this week.
That might look like enough inventory, but it’s a more selective market compared to 76,041 homes in October 2017.
New home listings were down about 21.5% between October 2022 and October 2023 statewide.
There’s about 3.6 months of inventory — or available homes for sale on the market — which means it’s a “sellers market” in the real estate world. A “balanced market” would be 6 months of inventory and more than that would make it a “buyer’s market.”
Fewer homes for sale and higher costs have translated to fewer deals being done, data shows.
During the month of October, there were 9,900 homes sold statewide. Likewise, the volume of home sales was down 20% compared to October 2022.
Al Perry, president of the Pennsylvania Association of Realtors, said that fewer homes on the market and slower dealflow does not mean there aren’t interested home buyers.
“We’re operating at about half that listing inventory now that we had just back then 2017,” Perry said.
It’s a combination of factors including inventory, prices, and interest rates. There’s also been a dearth of new homes being built while one of the largest generations, millennials, have hit their peak home buying years.
Perry said it’s a “pretty interesting dynamic out there,” but he’s noticed some relief in interest rates in terms of how much lenders are offering to potential buyers.
“We’re seeing some rates under 7%. If you’ve got premium credit you’re seeing some [rates] in the mid-sixes, depending on your down payment. So we have seen some relief there,” he said.
While the Federal Reserve sets the underlying rate — known as the Federal Funds Rate — it’s up to mortgage lenders to decide how much to charge customers.
The median sale price for a home in Pennsylvania was $217,537 last month, up from $214,000 in October 2022. The average 30-year fixed mortgage interest rate was 7.63% in late October, compared to 6.92% last year.
There’s an often repeated phrase in residential real estate: Marry the house but consider “dating the rate.”
That refers to the concept that a financial snapshot of the final monthly payment for a homeowner is a moving target since a fair percentage of owners take out 30-year-fixed rate mortgages with lenders, such as banks or credit unions.
That means no matter how much the mortgage rate offered by a lender like a bank might be, the chances are that it will change and offer homeowners an opportunity to refinance.
Perry says he doesn’t recommend buying with any anticipation that rates will immediately come down or home prices will skyrocket. That speculation can be risky and he recommends instead to “buy for today” if at all.
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