Philly’s housing market is changing. Here are 5 takeaways from recent trends.

It’s no secret that activity from home buyers and sellers slowed at the end of last year.

For one thing, mortgage interest rates peaked in the fall, when the average 30-year fixed rate topped 7%. Homes became less affordable to buy and the economy slowed, so fewer people entered the housing market in the Philadelphia area and nationally.

Both prices and home sales fell in the final months of 2022, according to a report on the Philadelphia housing market in the fourth quarter that Drexel economist Kevin Gillen released Thursday.

Looking back at the last few months and looking toward the future, here are some takeaways.

... from records set in 2022. Roughly 4,300 homes on the market sold last quarter. That’s below the city’s quarterly average of more than 4,500 sales.

And it’s a 51% drop from the first quarter of 2022, when the city hit a record of roughly 8,700 sales. Sales last quarter fell further than normal for the time of year.

» READ MORE: Data show the Philly area housing market is slowing down

... for two consecutive quarters for the first time since early 2014. In the fourth quarter of 2022, the average price fell by 0.9%, adjusted for seasonal market shifts and quality of homes. The previous quarter showed a 1.8% drop.

Price dips in the city were modest compared with other parts of the country.

... but appreciation has been slowing since summer 2021, when prices were 12.1% higher than the year before. The average increase in home values in the city was outpaced by average increases in the metropolitan area as a whole and nationwide.

For the last four decades, Philadelphia home prices have risen by an average of 5% every year. For the last eight years, prices have risen by 8.2% per year on average. The current price appreciation rate is 1.9% per year, falling below the historic average for the first time since 2015.

Home prices in January are faring better across the Philadelphia region than in other large metropolitan areas. Prices dropped from last year in 17 of the 50 most populous metros, according to a Redfin report.

... is up from pandemic lows. More than 4,100 homes were listed for sale at the end of 2022, according to multiple listing service Bright MLS. That’s up from the city’s record low of about 2,900 homes for sale in February.

But the city typically has averaged about 6,000 homes for sale.

Homeowners who locked in low mortgage rates are still reluctant to put their homes on the market, since they likely would pay higher interest rates for their next home.

Continued increases in housing supply would tamp down prices.

... in the coming months. How much it will ramp up is unclear. Any upswing will be a result of seasonal trends and some more favorable market conditions.

Downward-trending mortgage rates have brought some buyers back to the market. The average 30-year fixed rate fell again this week and stands at 6.13%, according to government-backed mortgage buyer Freddie Mac.

Demand for home loans has been on the rise this month, said Bob Broeksmit, president and chief executive officer of the Mortgage Bankers Association.

“Purchase demand is still below year-ago levels,” Broeksmit said in a statement, “but lower rates and improving affordability are favorable developments for the housing market heading into the spring.”