The Double-Edged Sword: Home Sales Decrease Despite Increase in Inventory while Manufacturing Activity Rebounds in Philadelphia

The number of homes for sale in March increased for the third consecutive month, reaching 1.11 million compared to 1.06 million in February, marking the highest level since November of the previous year. However, despite this rise in inventory, home sales decreased by 4.3% from February. One factor contributing to this decrease in sales is the high mortgage rates that continue to impact the housing market.

Although the number of homes for sale has increased by 14% compared to a year ago, it remains significantly lower than the 1.7 million typically for sale before the pandemic. In contrast, manufacturing activity has been on the rise in Philadelphia, with the industry index reaching its highest level since April of the previous year. The Philadelphia Federal Reserve’s Manufacturing Business Outlook Index increased by 12 points to reach 15.5 in April, with over a third of firms reporting a growth in activity. The survey also indicated a rise in new orders and shipments during that month.

There were signs of price increases in the manufacturing sector, with the prices paid index reaching its highest level since December. Around 26% of firms reported paying higher prices, and 12% stated that they had increased the prices of the goods they produced. These positive trends in manufacturing activity are a good sign for the Philadelphia area economy and could lead to further increases in demand for goods and services as businesses rebound from last year’s economic downturn caused by Covid-19 restrictions.

In conclusion, while home sales decreased slightly due to high mortgage rates, manufacturing activity is showing signs of improvement as businesses adapt to changing market conditions and consumers become more comfortable leaving their homes again after months of lockdowns and social distancing measures have been lifted or reduced.