As mortgage rates retreat from their recent highs, Philadelphia’s average new-home sales rate trended back toward its 12-month mean.

Existing-housing supply remains tight as homeowners are reluctant to sell barring significant life changes. Active listings are little changed from a year ago, and that continues to put upward pressure on prices. However, builders’ response has been relatively muted given the lack of developable land.

The number of active projects has been trending lower since the start of 2023. Redevelopment activity in the Germantown neighborhood has picked up since 2019 given its proximity to Center City and is expected to accelerate.


The metro area is expected to add a combined 2,300 residential units when two projects located at 1001 South Broad St. and 4601 Market St. are completed. Big developments along North Broad Street are also anticipated around the Amtrak and SEPTA stations.


Although the unemployment rate is holding below 4%, layoff announcements from employers like Jefferson Health, Passage Bio, and Cardone Industries could signal a subtle shift as higher interest rates start to cool hiring activity.


New-home sales in the Philadelphia metro area increased 3.2% year over year to an annualized rate of 4,942 units in February. Over the past 12 months, 3,039 of sales were attached units and 1,903 detached. Existing-home closings for the 12-month period ending in January posted a year-over-year decline of 23.2% to an annualized rate of 66,577 units. Of those, 8,637 were attached units and 42,638 detached.


The average list price for a new detached home in the Philadelphia region increased 7.7% from 2023 to $657,199 in March, while the average list price for a new attached home decreased 18.9% over the same period to $582,490. Homes priced under $350,000 experienced the most closing activity over the past year. The new-home affordability ratio for a detached home reached 44.1% in January.


Total nonfarm employment in the metropolitan statistical area increased 2.6% from the same period last year to 3,135,300 payrolls in December with approximately 4,000 more jobs compared with the previous month. The local unemployment rate remained flat at 3.8% in December. December’s jobless rate was lower than it was at the end of 2022 when it stood at 4.1%. Zonda forecasts the region’s unemployment rate will finish the year at 4.1%.


The current population for the area is approximately 6,280,640 people and is projected to increase by 0.2% this year. There are approximately 2,448,500 households in the region, which is up 0.7% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 3.5% for 2028. Incomes increased by 3.7% from the previous year to $94,390.

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