Learn more about the housing market in Pennsylvania

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

Pennsylvania Housing Market Overview 

Pennsylvania may be a good spot for homeowners who find themselves unable to afford real estate elsewhere in the Northeastern region. With a lower-than-average sale price and close proximity to some of the busiest metropolitan areas in the area, Pennsylvania may be the perfect place for your homeownership journey to begin. 

The housing market Pennsylvania has shown signs of growth, with an increasing sale price and inventory level. While sale prices across the country have been rising, an increasing housing supply is slightly rarer as mortgage rates climb, and current homeowners show hesitancy in listing their home on the market.  

An affordable market is nothing to scoff at, so if you are flexible in your location, take a closer look at the Pennsylvania area. Here are a few more things you should know about the market in this state.  

Pennsylvania Housing Market Trends 

To understand the Pennsylvania real estate market, it’s important to keep up with trends. Let’s look at some key ones in Pennsylvania: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024. 

Median Home Price 

The median home price in the current housing market Pennsylvania has is $298,400 as of May 2024 according to Redfin. This number is up 7.3% compared to last year.  

Comparatively, the United States median home price is $438,601. As you can see, Pennsylvania is well below the national average and can be a great place to look for a home if you’re wanting something more affordable than many other markets.  

Number of Homes Sold in April 2024 

This April, there were 10,171 homes sold in Pennsylvania. This marks a 7.2% increase from this time last year. However, it’s important to keep in mind that this number might be inflated compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow considerably in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The current median DOM in Pennsylvania is 26 days, one day lower than May of last year. With a quicker market comes more competition and a market that increasingly favors sellers—while only one day lower year-to-year is not something to remark upon, if this lowering DOM rate continues, it could show that Pennsylvania may become a more difficult market for buyers to find their dream home as the market picks up pace. 

However, the housing market in Pennsylvania is already showing signs of favoring sellers. The median days on market for the nation is 32 days, which is much higher than Pennsylvania’s range in the mid-20s.  

New Supply Statistics 

Pennsylvania saw 15,344 newly listed homes in May 2024. Last year, the number of homes listed was 7.5% lower. So, while supply seems to be increasing, the months of supply rate is still a measly two months.  

Months of supply indicate how long it would theoretically take for all the homes currently listed to sell with the current pace of the market. Six months is usually considered balanced—it is not a market that particularly favors sellers or buyers. However, the lower the number gets, the more it favors sellers. A two-month supply is relatively low, and hints at Pennsylvania’s fast-paced and seller-siding market.  

Property Tax Rate 

The average property tax rate in Pennsylvania is 1.49%. This makes Pennsylvania the 41st highest state for property tax rate. If a homeowner purchased a property at $475,600, they would pay around $7,087 in taxes. It’s important to point out that property taxes vary widely depending on the specific county of Pennsylvania and the value of the home, so this average rate may or may not be indicative of your situation. 

Foreclosure Rate in Q1 of 2024 

Pennsylvania’s foreclosure rate for the first quarter of 2024 is 1 in every 1,547 housing units, according to ATTOM. This makes Pennsylvania the 17th highest ranked state for foreclosures in the nation.  

Hottest Local Markets in Pennsylvania 

1. Harrisburg

Harrisburg, PA is the capital of the state and one of the hottest real estate markets in the area. Harrisburg is a historical and picturesque place to live, with its location in the Susquehanna Valley and its pivotal role in shaping American history.  

Harrisburg homes sold for 46.4% more than last year, coming to a median price of $164,000. Although this price increased almost 50% year-over-year, the average sale price is still well below the nation’s average. Perhaps this is the reason the market is so competitive—Redfin characterizes this market as very competitive, scoring 80 out of 100. Many homes get multiple offers, and the average days on market is a rapid 10 days, with some of the most popular homes going pending in around 3 days and selling for as much as 3% above list price.  

2. New Cumberland

New Cumberland is another historical city in Pennsylvania, with many famous figures notably passing through like Charles Dickens and Abraham Lincoln. New Cumberland has a walkable downtown and is full of family fun with many parks and playgrounds.  

The New Cumberland market has ramped up in recent years, with a median sale price of $280,000, a spike of over 19% since last year. Also, since 2023, there has been a 300% increase of homes sold. In May, there were 20 homes sold while in May of last year there were only five homes sold. This is uncharacteristic for the current market in the U.S., since high mortgage rates have tended to make existing homeowners stay in their homes and think twice before listing them.  

New Cumberland is extremely competitive, with a median days on market of four. Redfin remarks that this market is one of the most competitive in the nation. Some homes can sell with waived contingencies and for almost 8% above list price.  

3. Reading

Reading, PA once was home to the Reading Railroad, which was at one time the largest corporation in the world. Now, Reading is home to a couple notable sports teams like Reading United AC and the Reading Royals. 

The Reading housing market is performing better than it did last year, with a median sale price over 28% higher than last May for $180,000. Homes in this area go quickly—this May, the median DOM was only 19 days, with some homes going pending in as little as 4-11 days.  

Economic Factors Impacting the Pennsylvania Housing Market 

A holistic view of the housing market in Pennsylvania requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below: 

Mortgage Rates 

According to Bankrate, Pennsylvania current 30-year fixed mortgage rates are at 7.27%, slightly higher than the nation’s average of 7.05%. Higher interest rates deter borrowing and discourage those who already own homes from putting their homes on the market. Many homeowners report feeling “tied” to their current homes, as it is unlikely they will secure a mortgage rate as low as their current if they move to a new property. Prospective buyers in Pennsylvania would be wise to monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Pennsylvania is one of the states with the highest rate of inflation in the nation. According to a Consumer Affairs report studying the rising price of groceries, Pennsylvania ranked number one for the largest increase in prices at a whopping 8.2%. The state with the second highest rate is well behind Pennsylvania with Vermont at 7%.  

The United States Joint Economic Committee echoed the Consumer Affairs study by stating that Pennsylvania was behind only New Jersey and New York with the highest increase in monthly inflation costs from July to August 2022—Pennsylvania’s inflation increased $21 in this short time frame.  

Mortgage rates relate directly to inflation, another massive contributing factor to the affordability of housing and the status of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Pennsylvania. This means fewer people can truly afford to limit housing costs to less than the recommended 30% of their monthly income.  

Population Changes and Demographics 

The Pennsylvania workforce is only minutely behind the United States average with 60.1%, comparing to the nation’s 60.3%. However, this employment rate is an increase from 2021’s rate of 58.4%– while this number may have been affected by 2020’s COVID-19 pandemic, a strengthening workforce remains a good sign for the economy and Pennsylvania’s housing market.  

However, there was a small population decline of 0.2% from 2020 to 2022. Philadelphia county, one of the hardest-hit areas, lost over 36,500 people during this time frame. Some counties within Pennsylvania experienced increases, like Cumberland County with a rise of 3.5%, but these general population decreases could mean decreasing interest in the Pennsylvania housing market. 

Pennsylvania Housing Market Forecast 

Although the growth rate has fluctuated in recent years, Bankrate states that Pennsylvania’s population will likely get back to stable condition due to its major cities like Philadelphia and Pittsburgh. It remains the fifth most populous state in the nation.  

Prices in this state are trending upward, as is typical with many states in the country right now. Pennsylvania is in a better spot than many other areas, however, since its median price stays low. As other states continue to inflate their median sale price, Pennsylvania remains well below the national average and could see an increase in interest due to this trait.  

Homes could start to stay on the market a little longer than normal due to increasing mortgage rates and the likelihood that inventory is going to drop because of these hiking rates.  

Likelihood of Pennsylvania Housing Market Crash  

The Pennsylvania market will likely cool in the coming months, but rather than that spelling trouble, it is more of a correction from the frenzy that occurred across the country in recent years since the pandemic.  

Prices will likely fall, but experts do not anticipate a housing market crash. If you’re curious about your chances of owning a home in the current Pennsylvania market, consult with a trusted real estate agent and discuss your dream home, your budget, and how the current mortgage rates may affect your purchase. Be prepared to wait it out—the market right now may be too tough, and that’s okay. 

Forecast for The U.S. Housing Market 

Now that we’ve looked at Pennsylvania’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Pennsylvania Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into Pennsylvania’s current rental market, with key market trends from Zillow:

Pennsylvania Rental Market Key Trends 

• Median Rent: $1,550 

• Month-Over-Month Rent Change: $0 

• Year-Over-Year Rent Change: +$50 

• Available Rentals: 20,590 

Conclusion 

Purchasing a home anywhere is an important decision that requires a lot of time and research. Be sure to continue digging for further info on the specific neighborhoods you’re interested in and monitor interest rates and home prices before diving into this market. If you find that now isn’t the best time, take a step back and grow your savings and credit score. When in doubt, consult with a real estate professional to get advice tailored to your specific situation.