Philadelphia's housing market is experiencing a significant slowdown, with fewer homes changing hands now than in recent years. New data reveals that homeowners in the Philadelphia metropolitan area are staying in their properties longer, contributing to one of the lowest turnover rates in the country and reflecting a broader national trend of market caution.
Through the first nine months of this year, only 1.8% of homes in the Philly metro area were sold. This marks a notable decrease from the 2.6% turnover rate observed during the same period in 2019, before the market disruptions of recent years.
Key Takeaways
- Just 1.8% of Philadelphia metro homes were sold in the first three quarters of the year.
- This is a significant drop from the 2.6% turnover rate recorded in 2019.
- The trend mirrors a national slowdown, with U.S. home turnover at its lowest rate in at least 30 years.
- High costs, existing low mortgage rates, and economic uncertainty are key factors keeping homeowners from moving.
A Closer Look at Philadelphia's Stagnant Market
The decision by Philadelphia homeowners to remain in their homes is creating a tight market with limited inventory. The 1.8% turnover rate is not just a local phenomenon but places the city among some of the least active housing markets in the United States.
This rate is comparable to notoriously competitive and high-cost areas. For instance, San Jose, California, saw a turnover rate of 1.5%, while San Francisco and Los Angeles reported even lower figures at 1.3% and 1.2%, respectively. Philadelphia's market is behaving similarly to these West Coast hubs, where high prices and limited options have long been the norm.
By The Numbers: Philly's Housing Shift
The decline in home sales is clear when comparing pre-pandemic figures to today. The drop from a 2.6% turnover rate in 2019 to just 1.8% this year represents a nearly one-third reduction in market activity in the Philadelphia metro area.
This slowdown impacts everyone in the real estate ecosystem, from potential first-time buyers struggling to find a starter home to growing families looking to upgrade. With fewer properties listed for sale, competition for available homes can remain stiff, even as overall sales numbers decline.
The National Picture: A 30-Year Low
Philadelphia's situation is a clear reflection of a nationwide housing freeze. Across the United States, only 2.8% of homes were sold through September of this year. This figure represents the lowest national turnover rate recorded in at least three decades, signaling a historic level of market inactivity.
The current national rate is slightly down from last year, a period that already saw existing home sales fall to their lowest point since 1995. This sustained lack of movement indicates a fundamental shift in homeowner behavior driven by powerful economic forces.
Why Are Homeowners Staying Put?
Several factors are converging to keep homeowners from listing their properties. The primary driver is the dramatic shift in mortgage rates. Many current homeowners secured mortgages when rates were at historic lows, often below 3%. With current rates significantly higher, moving would mean giving up a low monthly payment for a much larger one, even for a similarly priced home. This effect is often referred to as being 'locked-in' to a low rate.
Furthermore, persistent high home prices and broader economic uncertainty make potential sellers hesitant. Concerns about inflation, job security, and the overall cost of living are causing many to adopt a wait-and-see approach rather than making a major financial move.
"America's housing market is defined right now by caution," said Chen Zhao, an economics researcher who analyzed the market data.
Comparing Cities: Where Sales Have Dropped the Most
While Philadelphia's turnover rate is among the lowest, other major U.S. cities have experienced even steeper declines in activity since 2019. This highlights how the market slowdown has impacted different regions to varying degrees.
The metropolitan area with the largest drop in its turnover rate was San Antonio, Texas, which fell by 2.4 percentage points. Other cities that saw significant decreases include:
- Charlotte, North Carolina
- Jacksonville, Florida
- Miami, Florida
- Orlando, Florida
These Sun Belt cities experienced supercharged market activity in previous years, and the current slowdown represents a more dramatic cooling-off period compared to markets like Philadelphia that were already more stable.
What is Housing Turnover Rate?
The housing turnover rate is a simple but powerful metric. It measures the percentage of existing homes in a specific area that are sold over a given period. A low turnover rate indicates that fewer people are moving, leading to less inventory on the market. Conversely, a high rate suggests a more dynamic and active market.
Implications for Buyers and the Future Market
The current market environment presents significant challenges, especially for prospective buyers. With fewer homes available, finding a suitable property is more difficult. Even with fewer sales, the lack of supply can keep prices elevated, creating affordability issues.
Experts suggest this period of caution is likely to continue until there is a significant shift in economic conditions. A notable decrease in mortgage rates or a stabilization of the broader economy could encourage more homeowners to list their properties, but the timing of such a change remains uncertain.
For now, both buyers and sellers in Philadelphia and across the country are navigating a housing market defined by hesitation. The days of rapid sales and frequent moves have been replaced by a more deliberate and stagnant landscape, with homeowners overwhelmingly choosing to stay right where they are.
