Minimal employment growth and weak demographics in Pennsylvania have economists convinced that the state's housing market is not quite on the road to recovery, according to a special commentary released by Wells Fargo Economics Group on August 26.
Pennsylvania's economy has struggled and the state's housing market has been slow to recover right along with it, Wells Fargo reported. Pennsylvania's real GDP increased by only 0.7 percent in 2013, about half of the national average growth rate. Nonfarm payrolls are up only 1.0 percent in the state from this time last year, which is much lower than the 1.8 percent nationwide year-over-year increase.
Analysts believe that the slow growth of the labor market in Pennsylvania has kept the housing market in the state from fully recovering from the bust of 2008, although the boom and bust in Pennsylvania were less severe than what they were in the rest of the nation. Home sales for 2014 have fallen 5.1 percent from this time last year, according to Wells Fargo. New home prices are up only 2.7 percent from a year ago in the state, far less than the national average of 7.5 percent, giving economists little hope for a third quarter rebound. Fewer homes are being built due to the low demand for new housing, another contributing factor to the sluggish housing market in Pennsylvania, Wells Fargo reported.
The Wells Fargo commentary indicated that not all the news is bad for the Pennsylvania housing market, however. Home prices in the state are only 6.7 percent away from their pre-recession peak while the national average is 12.9 percent away, a fact owed more to the minimal impact of the boom and bust in Pennsylvania than to earlier growth in the housing market. The result of this has been fewer homeowners with negative equity in Pennsylvania than in the rest of the country.
Homes in Pennsylvania are selling at an average median home price of more than 20 percent off of from the national average, according to Wells Fargo. This may be partially due to Pennsylvania's higher mortgage delinquency and foreclosure rates.