PHILADELPHIA, PA — Home sales in the Philadelphia metropolitan area fell 7% in September from a year earlier despite a 7.3% increase in available properties, according to Zillow’s latest housing market report, signaling weakening buyer demand as elevated mortgage rates continue to constrain affordability.
The decline was substantially steeper than the 2.5% nationwide decrease in existing-home sales estimated by Zillow Group Inc. (Nasdaq: Z, ZG), highlighting the pressure facing the Philadelphia region’s housing market.
The typical Philadelphia-area home was valued at $387,304 in September, up 2.4% from a year earlier but down 0.5% from August, according to the Zillow Home Value Index.
The combination of falling sales and rising inventory indicates that additional housing supply has not been sufficient to offset the impact of higher borrowing costs.
Philadelphia’s annual home-price appreciation also exceeded the national rate of 1%, even as local transaction activity contracted more sharply than the national average.
The region’s rental market showed a different trend. Typical monthly rent reached $1,903, an increase of 3.3% from September 2025, compared with a 2.7% increase nationwide.
Philadelphia-area rents were unchanged from August, suggesting that rental costs remained relatively stable month to month despite their annual increase.
The local figures were part of Zillow’s September Market Report, released October 6, which documented a broader slowdown in home purchases as mortgage rates climbed to their highest level in nearly three years.
Nationally, newly pending home sales dropped 8.5% from September 2025 and 11.2% from August. Pending sales measure properties that have moved under contract and provide an early indication of future completed transactions.
Existing-home sales totaled an estimated 319,346 nationwide, down 5.6% from August and 2.5% from a year earlier. Zillow characterized the figures as preliminary estimates subject to revision.
Mortgage rates ended September at 7.28%, their highest level since November 2023, according to Freddie Mac data cited by Zillow.
Higher financing costs have increased the expense of homeownership even as national home-price growth has moderated.
The typical U.S. home was valued at $366,913 in September, up 1% annually but down 0.5% from August.
A monthly mortgage payment on a typically valued home reached $1,922, assuming a 20% down payment and excluding taxes and insurance. That represented a 6.7% increase from a year earlier.
For a household earning the national median income, the estimated cost of owning a typically valued home, including taxes, insurance, and maintenance, consumed 34.3% of income, compared with 33.7% a year earlier.
The national housing inventory reached 1.39 million properties, up 2.5% from September 2025, marking the 34th consecutive month of annual inventory increases.
New listings rose just 0.4% from a year earlier and remained 11.9% below their pre-pandemic baseline.
Homes took a median of 29 days to go under contract, two days longer than both August and September 2025.
Price reductions became more common, with 27.4% of listings recording a cut during September, compared with 26.2% a year earlier.
The slowdown in home purchases coincided with stronger rental-price growth.
Nationally, typical monthly rent increased to $1,932, up 2.7% annually, the largest year-over-year increase since April 2025. Annual rent growth has accelerated each month since April, according to Zillow.
Mischa Fisher, Zillow’s chief economist, said the divergence reflects the financial advantages of renting for some prospective homebuyers.
“Buyers on the margins are finding the monthly savings for renting too good to pass up, even if their long-run goal is still to purchase a home,” Fisher said.
Zillow expects home sales to remain below year-earlier levels through the fourth quarter, although Fisher said a reversal in mortgage rates could alter that outlook.
“We expect sales to remain lower than last year through the fourth quarter,” Fisher said. “However, it’s not out of the question that rates will decline as rapidly as they rose, which would bring both buyers and sellers back to the market.”
For the Philadelphia region, the September figures underscore a widening gap between housing availability and purchasing activity, with more homes on the market but fewer completed sales.
The region’s 7% annual sales decline, coupled with rising home values and rents, suggests that affordability remains a central constraint on housing demand despite the increase in available properties.
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