Home sales are slowing in the Philadelphia metro

Home sales in the Philly metro were down 24% year over year, closely tracking the decline nationwide, per RE/MAX’s February report.

Why it matters: In 2022, potential buyers were desperate for more inventory. Now, homes are hitting the market but people can’t afford them.

What’s happening: Rates for a 30-year loan were at 6.09% in early February, but had shot up to 6.65% by the end of the month, per Freddie Mac.

By the numbers: Inventory crept up nearly 15% since last February even as sales plummeted in the region.

• Sales also dipped .7% in February compared to January and inventory also dropped 6%.
• It took an average of 30 days to sell a house in February 2022. Last month, it took 21.

Plus: The median sale price in the Philly region rose more than 5% to $305,000 since last February, per RE/MAX.

Zoom in: Philly continues to suffer from an affordable housing crisis while inflation drives rent prices higher.

Philly had the 9th largest drop in home sales over the past year among the top 50 metro areas RE/MAX analyzed.

• Miami had the largest drop in sales (37%), followed by San Francisco (32%) and De Moines, Iowa (29%).
• Nationally, home sales fell by 24%.

Zoom out: Because there’s less competition right now, buyers don’t have to front as much cash as they did a year ago, Axios’ Emily Peck reports.

Between the lines: Buyers who can afford current mortgage rates have more power.

• They have more options than a year ago, they can take their time searching and they can make offers that aren’t wildly above list price.

Yes, but: These rates make buying unaffordable for many.

What they’re saying: Falling housing sales have historically been a prelude to a drop in prices, said Drexel University economist Kevin Gillen.

• A fall in prices could create a more balanced market between buyers and sellers as the spring housing market gets underway.
• “We’ve seen prices rise faster than income; that’s made a lot of housing more unaffordable,” he said.

What's next: Mortgage rates dropped nearly a quarter point this month, which means buyer activity will likely pick back up.