PHILADELPHIA, PA — Closed home sales in the Philadelphia metropolitan area plunged 13.8% in September from a month earlier, the steepest decline among the nation’s 50 largest metropolitan markets, as rising mortgage rates pushed U.S. housing demand to its lowest level in nearly 12 years.
The Philadelphia decline exceeded Denver’s 13.7% drop and Detroit’s 12.4% decrease, according to an October 12 report from real estate brokerage Redfin, part of Rocket Companies (NYSE: RKT).
The regional contraction came as pending home sales nationwide fell 4% in September from August, the largest monthly decline in more than three years. Pending sales reached their lowest level since spring 2014, excluding April 2020, when the pandemic temporarily disrupted housing transactions.
Mortgage rates were a major factor. The weekly average rate climbed to 7.28% by the end of September, its highest level in three years, increasing borrowing costs and limiting purchasing power.
Pending home sales declined year over year in all 50 major metropolitan markets for the first time since September 2023, when mortgage rates also remained above 7% for an extended period.
The Philadelphia region’s sales decline contrasted with conditions in nearby Montgomery County, PA, which recorded the smallest year-over-year decrease in pending sales among the 50 markets, at 1.6%.
Montgomery County also ranked among the metropolitan markets with the lowest contract cancellation rates, with fewer than 8% of deals falling through. Redfin identified it as one of just five seller’s markets nationwide, indicating that buyers continued to face comparatively limited housing availability.
The contrasting figures underscore differences in market conditions across the region, even as higher borrowing costs constrained housing activity nationally.
“It’s not surprising that when rates climb above 7%, fewer people buy homes because fewer people can afford them,” said Chen Zhao, Redfin’s head of economic research.
Zhao said reduced competition could give buyers greater leverage to negotiate prices, repairs, closing costs, and mortgage-rate buydowns.
Nationally, closed home sales declined 1.6% from August to their lowest level since late 2023. Most September closings involved contracts signed during July or August.
The median U.S. home-sale price increased 1.3% from a year earlier to $393,895, the smallest annual gain since February.
Asking prices showed further signs of weakening. The median asking price fell 0.5% from August and increased just 0.6% year over year, the smallest annual increase since April.
More than 60% of homes sold in September closed below their original asking prices, continuing an 18-month period in which roughly three out of five transactions involved discounts.
Nearly one in five sellers with active listings, or 19.8%, reduced their asking prices during the month. The share of sellers making price cuts increased in 43 of the 50 largest metropolitan markets.
Housing inventory also expanded despite weaker demand. The total number of homes for sale increased 1.2% from August, reaching its highest level since March 2020, while new listings rose 0.3%.
The widening gap between available inventory and buyer demand has contributed to an increase in canceled transactions.
Redfin reported that 14.5% of home purchases placed under contract in September were subsequently canceled, the highest share since the pandemic began and the highest on record outside March and April 2020.
Cancellation rates varied substantially by market, reaching 19.9% in Jacksonville, Florida, compared with 2.8% in San Francisco.
The figures indicate that sellers in many markets are facing greater competition and pressure to negotiate, while the Philadelphia area’s sharp decline in completed sales demonstrates the impact of weaker transaction activity.
Redfin’s monthly figures are seasonally adjusted, except for median sale prices and mortgage rates. The Philadelphia closed-sales comparison is month-over-month, while Montgomery County’s pending-sales figure measures the change from a year earlier.
The full report, including additional metropolitan-area data, is available at https://www.redfin.com/news/pending-home-sales-sink-rates/.
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