Philadelphia-area home sales down, prices mixed

Although second-quarter sales of new and existing homes in the eight-county Philadelphia area tumbled from the same period in 2007, prices here still have not fallen as much as in many other major U.S. markets.

Year-over-year existing-home sales fell 24.7 percent in the eight counties, with Camden County (31.8 percent) and Delaware County (31.1 percent) leading the pack, according to Prudential Fox & Roach HomExpert Report, based on Trend Multiple Listing Service data.

In the same period, second-quarter net new-homes sales in Philadelphia's seven suburban counties fell 44.9 percent from the 2007 period, according to Hanley Wood Market Intelligence.

The new-home figures "show us that buyers are not convinced that the bottom has occurred," said Wayne Norris, Hanley Wood's regional sales director.

Because the period reflects the spring selling season, "these numbers are especially disappointing to the builders," Norris said.

New-home base prices in the region were down 6.9 percent, but the reason was that the volume of sales was much higher in the lower-priced condo and townhouse market, Norris said.

Single-family-home prices were up 0.5 percent; condos 4.8 percent higher; and townhouses down 4.9 percent.

"Entry-level sales are dragging down the median," Norris said.

In the city, the 26.9 percent drop in year-over-year existing-home sales made it the second-slowest quarter since spring 2001 and half of their 2005 peak, according to Kevin Gillen, a Wharton research fellow.

Existing-home prices regionwide fell just 0.4 percent, according to HomExpert.

The largest drops were in Delaware County (8.7 percent) and Bucks (6.6 percent). Philadelphia prices, propelled by higher-price condo resales, rose 1.4 percent; Montgomery County prices were up 0.7 percent.

Hanley Wood began tracking Philadelphia new-home sales only in August 2007, and there is no year-to-year comparison available yet.

A separate study by the Web site Zillow.com found that the Philadelphia-area median price (including Wilmington) in the second quarter was 3.4 percent lower than the same period a year earlier, or $227,321.

Zillow's overall median price, however, was just $1,679 below HomExpert's second-quarter median - $229,000 (without Wilmington).

Philadelphia "is faring far better than the U.S. as a whole," said Stan Humphries, Zillow's vice president of data and analytics. By comparison, U.S. home values fell 9.9 percent year-over-year.

"Of the 165 markets we track, Philadelphia performed better than 117 of them," he said.

Almost one in four homes sold in the last 12 months has gone at a loss in the United States, compared with 7.1 percent in this area.

"Because home values [in the area] aren't dropping as significantly, homeowners are holding on to more value, and less are slipping into negative-equity situations," Humphries said.

In fact, of those who bought homes in the Philadelphia region since 2003, only 13.2 percent are currently in negative-equity situations, he said, in which the home is valued at less than the mortgage.

"While this may seem high, on a national level, almost one in three are in these situations," Humphries said.

Suburban condo sales in the Philadelphia region in the last 12 months are higher than single-family purchases because condos tend to cost less and are thus more attractive to first-time buyers.

Prices did not rise here as much as they did in other major markets during the boom, so they have not fallen as precipitously as prices in other areas.

While foreclosures and short sales are affecting other markets, this region is not yet experiencing much of either.

Wharton's Gillen warns that the sales volume is usually a leading indicator of the direction prices will go, and the number of transactions continues to plummet.

Commerce Bancorp Inc. chief economist Joel L. Naroff also expects some further weakening in prices.

"The longer this goes on, the more homes that come on the market, as people who have put off trying to sell because of the soft market finally decide to try their luck," Naroff said, "that would further depress prices."