Pennsylvania Real Estate Market: Predictions for 2024?

Pennsylvania homes continued to sell at eye-popping prices last month. The median home sale price rose 6.6% year-over-year from $248,200 to $264,700 in January. The Pennsylvania housing market remains robust despite a slight dip in home sales, with 7,104 homes sold.

Interest rates are at 7.28%, but is Pennsylvania still a seller’s market? Let’s look at the facts.

Mechanicsburg homes sold for a median sale price of $397,500 in January, with a drastic increase of 55.5% year-over-year. Homes in New Castle sold for a more than median sale price of $105,000, a 31.4% increase year-over-year. In fact, there were no markets in Pennsylvania where prices declined year-over-year.

Interest rates are at record highs, with few home buyers. But the inventory is so low that 27% of homes sold above the list price!

• If You Are A Home Buyer: You can avoid bidding wars and avail seller concessions if you buy a home now. The 7.28% interest rate and mortgage payments are significant, but rates are unlikely to drop in the next few months. If they do, you can refi.
• If You Are A Home Seller: You can lock in Pennsylvania’s high home prices. Homes listed on MLS sell faster and for 17.5% more than off-MLS homes. That could be thousands of dollars in additional proceeds if you sell via Houzeo.

The current Pennsylvania real estate market statistics reflect the national trend of high demand and low supply. Home sales and property prices in Pennsylvania increased despite 2023’s slow market.

So, How is the Real Estate Market in Pennsylvania?

Swell! Home values in Pennsylvania rose by 43% in the last 5 years. But, home sales decreased by 5.7% in January 2024 YoY. Maybe due to the mortgage rate climbing to a two-decade high of nearly 8%! And the number of houses for sale in PA was 30,098 in the month, 4.7% less than in 2023.

The decrease in home sales can be attributed to not having enough properties in Coal State. The months of supply is 3 months, which makes PA a seller’s market. So, if you want to sell a Pennsylvania property, now is the right time to list it on MLS.

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Pennsylvania Real Estate Market Statistics

• Average Home Prices: The average median home price in Pennsylvania is $264,700, up by 6.6% YoY. In 2024, experts predict the median sale price will increase due to the tight inventory. Currently, the sale-to-list price ratio is at 97.9%, with an increase of 0.6% YoY compared to January 2023.
• Home Sales: As per January 2024 data, home sales decreased by 5.7% YoY! In January 2024, 7,104 homes were sold, down from 7,530 in January 2023.
• Average Rent Prices: Rental costs vary statewide. An average tenant in Pittsburgh pays $1,531, while the one living in Philadelphia pays $1,600.
• Median Days on the Market: The median days on the market for homes for sale was 40 days, down by 12 days YoY.
• Pending Sales:  The number of homes for sale shrank by 4.7% YoY compared to 2023. Currently, there are 30K homes for sale in Pennsylvania.
• Months of Supply: The average month of supply is 3 months. Pennsylvania’s inventory isn’t as squeezed as the national housing market.

Pennsylvania Housing Market Predictions 2024

Pennsylvanians have survived the shockwaves of skyrocketing mortgage rates and rising home prices of 2023. Here’s what we predict for Pennsylvania’s housing market:

1. Home Sellers Will Return to the Market in 2024: Sellers who chose the sidelines in 2023 will come back. Especially those who can’t avoid new jobs or want to move to a cheap place. Whitney, the analyst who predicted the 2008 financial crisis accurately, has forecasted that baby boomers looking to downsize will also add up to 30 million housing units. Yowaza!
2. Mortgage Interest Rates Will Stabilize by the 2nd Half of 2024: Mortgage rates hit 7.79% in October 2023, the highest level in 23 years. However, the rate dropped to 7.35% in November due to the softening labor market and slowing economy. Even the annual inflation rate went from 3.7% to 3.2%. We think the rates will remain above 6%, but they will stabilize in the second half.
3. The Number of Home Buyers Will Rise: The historically high interest rates averted buyers in 2023. But mortgage demand rose after the interest rates lowered to 7.35% in November. The easing inflation and stabilizing rates will bring back house hunters.
4. Home Prices Will Continue to Rise: Home prices rose steadily in the top metros across PA YoY, reaching $264K in January 2024. Experts predict home prices will continue to rise until the low supply-high demand dynamic changes.
5. iBuyers Will Continue to Make Lowball Offers: iBuyers offered 104.1% of market value in 2021. They offered 86% in 2022 and around 70% in 2023. Opendoor and Offerpad have lost billions of dollars in 2023. As they struggle to survive, they will make lowball offers.
6. New Home Constructions Sales Will Increase: NAHB predicts that new house building starts will increase by 6% in 2024. This increased builder confidence is due to low borrowing rates, a robust economy, and rising home values.

Bonus Prediction: Buyer Broker Commissions Will Be Negotiable!

In a shocking turn of events, the jury in Missouri awarded more than $5 billion in damages to the Sitzer-Burnett plaintiffs. This motivated nationwide home sellers to file grievances against NAR’s Cooperative Compensation Rule.

NAR’s Cooperative Compensation Rule or Participation Rule states that listing brokers must offer competitive compensation to buyer agents if they want to list properties on an NAR-affiliated MLS.

Lawsuits like Moehrl, Gibson, Batton, Nosalek, and Batton 2 challenge the Participation Rule. They accuse NAR and other top real estate companies of colluding and conspiring to keep agent commissions high.

If the jury also finds the defendants guilty in these cases, buyer agent compensation may change. Buyer agents may become obsolete by 2025! Phew.

While buyer agents are unlikely to be obsolete in 2024, they may be open to negotiating commissions. That’s probably how they will still have some skin in the game.

When Will the Housing Market Crash in Pennsylvania?

A housing market crash in Pennsylvania is unlikely.

Pennsylvania’s warm weather will continue to attract buyers. The new construction market in Pennsylvania is expected to remain strong in 2024, with continued demand for new homes outpacing supply.

Hazelton was the fastest-growing city in 2023. The city has established itself as a hub for healthcare, logistics, and manufacturing, creating employment opportunities and boosting the local economy. Hazelton’s affordable housing draws families and individuals seeking lower living costs.

Pennsylvania’s job market is currently strong. The unemployment rate is at 3.5%. In fact, Pennsylvania’s private sector employment grew by 4.1% in September 2023, faster than the national average of 2.0%. And Pennsylvania’s economy is expanding at a faster pace than the country as a whole.

The average cost of living in Pennsylvania is $49,040. The median household income is $73,000. Living in Philly’s cold and snowy weather is relatively affordable. So it is unlikely that Pennsylvania’s housing market would crash anytime soon.

2024: Is it a Buyer’s or Seller’s Market?

2024 will be a terrific market for sellers. (And buyers, too!)

Home prices in Pennsylvania are steadily rising. This will continue till the supply-demand dynamic changes. The number of houses for sale in PA was 30,098 in January 2024. This is close to the 37K homes in the summer of 2023, a period that is regarded as the best time to sell a house in Pennsylvania.

In November, the mortgage rate plummeted from a two-decade-high rate of 8% to 7.28%, adding more new listings on the market. This shows that those who refused to sell due to mortgage rate lock are finally acclimatizing to 7% rates. Come Spring 2024, more homeowners will follow suit and list properties on Pennsylvania MLS.

The increase in new home listings in Pennsylvania has also brought back buyers who were hugging the sidelines. In fact, the recent uptick in mortgage applications shows that buyers are returning.

House hunters who could not find affordable homes in 2023 will also start shopping in 2024. The demand for Pennsylvania houses will increase – and that’s why sellers may be able to dominate the market.

However, new builds will compete for attention from buyers. Home builders have persuaded buyers to buy new construction homes with mortgage buydowns worth $30K in 2023! Builders will continue offering concessions in 2024, and home sellers may have to wage wars against them.

Listings of new constructions, baby boomers looking to downsize, and desperate home sellers will flood the market in 2024. The properties for sale in Pennsylvania will increase. So, whether you are looking for a condo in Springfield or a single-family primary home in Philadelphia, you will find your dream home next spring.

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