Mortgage Rates and Home Sales: A Closer Look at the Housing Market and Manufacturing Industry in Philadelphia

In March, the number of homes for sale increased for the third consecutive month, reaching 1.11 million compared to 1.06 million in February. However, despite this rise in inventory, home sales decreased by 4.3% from February. One factor contributing to this decrease in sales is the high mortgage rates that continue to impact the housing market.

In the Philadelphia area, manufacturing activity has been on the rise, with the industry index reaching its highest level since April of the previous year. The Philadelphia Federal Reserve’s Manufacturing Business Outlook Index increased by 12 points to reach 15.5 in April, with over a third of firms reporting a growth in activity. Additionally, there were signs of price increases in the manufacturing sector, with around 26% of firms reporting paying higher prices and 12% stating that they had increased the prices of the goods they produced.

The average rate for a 30-year mortgage is nearing 7%, further discouraging homeowners from putting their homes on the market. Although the number of homes for sale has increased by 14% compared to a year ago, it remains significantly lower than the 1.7 million typically for sale before the pandemic. High mortgage rates have made homeowners hesitant to sell as many locked in lower rates years ago and now are seeing them increase rapidly which makes them reluctant to part with their properties at higher costs.

These positive trends in manufacturing activity are a good sign for