PA Housing Market 2025: What Buyers and Sellers Need to Know

The Big Picture

Pennsylvania's housing market in 2025 is in a transitional phase. After years of historically low inventory and bidding wars, we're seeing a gradual shift toward balance — though it's still firmly a seller's market in most regions. Interest rates have stabilized compared to the volatility of 2023-2024, and buyers are adjusting to the new normal.

Here's what we're seeing across the state's key markets and what it means for your next move.

Interest Rates and Affordability

Mortgage rates have settled into the mid-6% range for a conventional 30-year fixed loan. While that's significantly higher than the sub-3% rates of 2021, it's a far cry from the 8% peaks we saw briefly in late 2023. The market has adjusted, and buyers who were sitting on the sidelines waiting for rates to drop are starting to re-enter.

The key insight for buyers: don't wait for 4% rates to come back. They probably won't anytime soon. The current environment still offers strong purchasing power, especially when you factor in PA's relatively affordable home prices compared to neighboring states like New Jersey and New York.

Philadelphia Metro

The Philadelphia market remains robust. Median home prices in the city proper have risen roughly 5-7% year over year, with neighborhoods like Fishtown, Kensington, and Point Breeze continuing to see strong appreciation driven by ongoing development and demand from young professionals.

Center City condos have rebounded from their pandemic-era softness, though the recovery has been uneven — units with outdoor space and modern amenities are moving fast, while older buildings with high HOA fees sit longer. If you're selling a condo, pricing strategy is everything right now.

The Suburbs Are Still Hot

Montgomery, Bucks, Delaware, and Chester counties continue to see strong demand. Families relocating from the city for more space, better schools, and quality of life are competing with existing suburban residents looking to upgrade. The result: low inventory and competitive pricing in the $400K-$700K range.

The sweet spot for buyers right now is looking at homes that need some cosmetic updates — the "move-in ready" premium is real, and you can often get a better deal on a property that needs paint and new flooring versus one that's been fully staged.

Lehigh Valley and Beyond

The Lehigh Valley (Allentown, Bethlehem, Easton) has emerged as one of PA's hottest markets, driven by its relative affordability compared to the Philly suburbs and improving job market. We're seeing significant interest from remote workers who want more space without completely disconnecting from the Philadelphia and New York metros.

Central PA and the Poconos continue to attract investors and second-home buyers. The Poconos especially have seen sustained demand from New Yorkers looking for weekend retreats and remote work getaways.

What This Means for You

If you're buying: Get pre-approved before you start looking. In competitive areas, having a strong pre-approval letter and a responsive agent makes the difference between winning and losing a bidding situation. Consider looking slightly outside your ideal area — the value gap between adjacent neighborhoods can be significant.

If you're selling: Pricing correctly from day one is critical. Overpriced homes are sitting longer than they have in years, and price reductions signal weakness to buyers. Work with an agent who knows your specific market and can pull accurate comps — not just zip code averages.