Supply deficits hurting Lehigh Valley real estate market

A lack of supply is still making home buying in the Lehigh Valley a tough hill to climb for many.

In its August statistics, the Greater Lehigh Valley Realtors said competition for homes is becoming more intense, with a 34.8% drop in inventory over the year and a median sales price of $331,750, just missing the local record of $335,000 set in June.

“Economists have been calling on the new-home market to make up for the supply deficits in the real estate market,” GLVR CEO Justin Porembo said. “It is critical to expand supply as much as possible to widen access to home buying. Home prices will be influenced by how much inventory is brought to market. Increased homebuilding will tame price growth, while limited construction will lead to home price appreciation outpacing income growth.”

In August 2022, the inventory in the Valley was 902 homes. The latest number is 508.

Builders in the Valley are making a valiant effort to keep up with that demand.

The Lehigh Valley Planning Commission said development proposal plans were filed for about 2,800 new homes. Of that number, 433 were single-family homes, 603 were townhomes, 222 were twins, 63 were manufactured homes and 20 were condominiums. The rest were apartments.

That extends a seven-year growth spurt in the region, the LVPC said.

There is still a lot of work to be done, as the GLVR also reported a 12.1% drop over the year in new listings to 703 in August, while a month’s supply of inventory fell 15.4% to 1.1 months. The only consistent statistics was average days on the market, which remained at 15.

By comparison, sales of newly built, single-family homes were up 4.4% nationally in July, according to the U.S. Department of Housing and Urban Development. New home sales were up 31.5% yearover-year.

Another factor is higher mortgage rates as potential sellers are holding onto their current homes and lower interest rates. The latest

National Association of Realtors forecast says that 30-year fixedrate mortgage could reach 6.4% by the end of the year with only a drop to 6% in 2024.

“Higher mortgage rates are having a so-called ‘golden handcuff effect,’ discouraging homeowners who locked in low rates a few years ago from selling,” GLVR President Howard Schaeffer said. “This has created an inventory logjam in the housing market. 82% of home buyers say they feel ‘locked in’ by their existing low-rate mortgage, according to a survey from realtor. com.”