Pennsylvania’s housing market remains relatively stable compared to other parts of the country but homes are becoming less affordable in the state, signaling a shift away from a “sellers’ market,” according to a second-quarter economic review released today by the Pennsylvania Association of Realtors.
Statewide sales rose at an annual rate of 8 percent in the quarter and the average price of an existing home rose 12 percent, PAR reported.
“The most important development in the state’s single-family-home market last quarter was a significant drop in home affordability,” said Dr. Jacob De Rooy of Penn State Harrisburg, PAR consulting economist and author of the study. He said reasons for the drop were rising mortgage interest rates, slow growth in home buyer income, more cautious lenders and increased home prices.
The composite index of Pennsylvania housing affordability for second-quarter 2006 was 119.4, compared with 136.4 in the first quarter. The index measures affordability factors for all home buyers making a 20 percent down payment with an index of 100 defined as the point where a median-income family has the exact amount of income needed to purchase a median-priced existing home.
While the slowdown in the growth of Pennsylvania’s real estate markets has been dramatic, Dr. De Rooy said, “all of these situations point to a housing market that is settling down slowly and in an orderly way. Other states will be in for rougher weather.”
Highlights of the report:
–The Southeastern region (Berks, Bucks, Chester, Montgomery, Delaware, Philadelphia) accounted for 42 percent of single-home sales in the state for the quarter, up from 37 percent the previous quarter. The average home price rebounded to $254,600, but stayed just below the historic high of $255,600 last year.
- In the Northeast region (Schuylkill, Lehigh, Northampton, Carbon, Luzerne, Pike, Lackawanna, Wyoming, Susquehanna, Wayne), sales volume reached an historic high with this area accounting for 11 percent of the state’s total sales and home prices averaging $224,500.
- The Southcentral region (Bedford, Cambria, Fulton, Huntington, Franklin, Mifflin, Juniata, Perry, Cumberland, Adams, York, Lancaster, Lebanon, Dauphin) accounted for 20 percent of single-family home sales in the state, with average home prices jumping to $204,400.
- The Southwestern region (Mercer, Lawrence, Butler, Clarion, Beaver, Allegheny, Armstrong, Indiana, Westmoreland, Washington, Greene, Fayette, Somerset, Jefferson) accounted for 22 percent of the state’s total sales of single-family homes.
- The Northcentral region (Potter, Tioga, Bradford, Cameron, Clinton, Lycoming, Sullivan, Clearfield, Center, Union, Snyder, Northumberland, Montour, Columbia), accounted for 3 percent of the state’s home sales and average home prices were $124,900.
- The Northwest region (Crawford, Erie, Elk, Forrest, McKean, Venango, Warren) is showing signs of softening despite some recovery in sales and prices during the quarter. The region has shown wide swings in prices and especially in sales volume and during the last two quarters there has been reason for concern as dollar sales volume declined here before it did statewide.
The full report is available online at http://www.paRealtor.org/content/economic.asp.
