In Pennsylvania, Home Prices Not Dragging Down Job Market

As 2006 drew to a close, the Lehigh Valley (Pa.) economy continued to see strength on the employment front, tempered a bit by some increasing weakness in the Central Pennsylvania real estate market.

Home prices in the region fell in November for the first time in more than two years, according to the Allentown Morning Call. The average cost of an existing home in Lehigh and Northampton counties was $208,000, a drop of 2 percent from November 2005.

The dip in prices means homeowners who are trying to sell their properties might not be getting as much as they had hoped. Buyers, on the other hand, have their pick of properties in this Pennsylvania housing market, giving them a chance to make offers below the listing price.

Other key indicators are also pointing to a slowdown:

• The number of homes sold has fallen six consecutive months. Despite relatively low Pennsylvania mortgage costs, the number of homes sold in November fell 22 percent compared to the same month last year.
• Houses are lingering on the market. On average, properties are staying on the market for 47 days, or about seven weeks. A year ago, they were moving in less than six weeks.
• The glut of homes on the market is slowing the pace of sales. The number of pending home sales — a measure of future buying activity — fell 25 percent. It was the lowest number of pending sales contracts since December 2003.

The jobs market, meanwhile, shows no signs of such weakening, resulting in home amongst officials that demand for home mortgages in the area may remain strong throughout 2007 and beyond.

Unemployment in the Lehigh Valley rose a negligible one-tenth of a percent, to 4.3 percent, in November, compared to the previous month, according to data compiled and released by the Pennsylvania Department of Labor and Industry.

Economists consider an unemployment rate of 5 percent to be as close to full employment as can be expected, realistically. That means any person who wants a job can get one, although not necessarily at high wages.

Several sectors — retail; education and health; trade, transportation and utilities — reported record employment. Compared to most of the U.S., the state contains an abundance of affordable housing.