May 01, 2016 | Revenue & Economic Update
The Pennsylvania Association of Realtors (PAR) publishes quarterly data on home prices and sales completed by realtors in the Commonwealth. The data do not provide coverage of all home sales (e.g., sales completed by homeowners), but they do capture the majority of home sales and provide useful information regarding the current state of the housing market.
The PAR data reveal very strong growth in home sales for 2013 (12.5%), followed by weakness in 2014 (0.6%) and another strong year in 2015 (10.6%). (See table.) Although home sales grew dramatically last year, the increase in the average price of homes sold was modest (1.6%). These trends are broadly similar to those at the national level. Data from the National Association of Realtors show a reduction in single family home sales in 2014 (-3.1%) followed by a solid year in 2015 (7.0%). For the U.S., the average price of a single family home sold increased by 4.0% in 2014 and 4.6% in 2015. Although Pennsylvania home sales were considerably stronger in 2015, the average price increase was much lower. For the first quarter of 2016, data from PAR reveal continued strength for Pennsylvania, as sales increased by 9.8% and average prices increased by 1.2% on a year-over-year basis.
The Commonwealth levies a tax of 1.0% on the final transaction price of all home and business sales. This realty transfer tax also provides a real-time measure of the state of the housing market, though there is typically a lag of one or two months’ time between buyer engagement, the actual closing of a sale, and the collection and remittance of tax. Revenues this fiscal year have been much stronger than last year, but the gains are moderating.The first quarter of 2016 was 13.5% higher than the prior year, while April 2016 only gained 0.5% over the prior year. May and June revenues will provide important insights into the Pennsylvania housing market, because the active period for home sales typically begins in the second quarter.