Record prices don’t tell the whole story of the Lehigh Valley housing market

BETHLEHEM, Pa. – Melissa Mancia and her husband knew they were entering a competitive housing market.

They had talked with family members who had bought homes in the area. They knew houses they liked could attract multiple offers above asking price. And they knew they might have to make concessions to get one.

Still, the couple ended up bringing an additional $18,000 to the closing table after the Catasauqua home they agreed to buy appraised for less than their offer.

“It’s crazy,” Mancia said.

Their experience offers a glimpse into the increasingly complicated Lehigh Valley housing market – where home prices continue to set records, but buyers are becoming more selective about where they are willing to spend their money.

The median sales price reached $389,500 in July, according to the Greater Lehigh Valley Realtors, setting a record for the second consecutive month. The median was up 3.9% from $375,000 in July 2025.

But the median price doesn't tell the whole story.

“There’s not really one Lehigh Valley market,” said Donna Sacco, an agent with Coldwell Banker Hearthside and president-elect of the Greater Lehigh Valley Realtors. “I think we have a lot of micro-markets.”

Buyers are looking based on municipality, school district, price point and property type, Sacco said. Even the condition of an individual home can determine how much attention it receives.

Jill Koch, a Nazareth-based agent with Berkshire Hathaway HomeServices, said the same forces are particularly apparent in the Nazareth area, where school district and a lack of inventory continue to drive demand.

“Nazareth has always been buzzing,” Koch said. “There’s a lot of factors, of course, including school district [and] the lack of inventory.”

The Lehigh Valley remains a strong seller's market, but Sacco said buyers have become much more educated and cautious.

“They’re not just sitting there waiting on the sidelines anymore,” she said. “They’ve educated themselves.”

'We played the game'

Mancia said she and her husband began looking for a home in early May, motivated in large part by the cost of their rent.

They looked at roughly 10 to 12 homes in about a month, including properties in Easton and Bethlehem. They ultimately found what they were looking for in Catasauqua, about five minutes from where they had been living.

The couple had been approved for a loan of up to $400,000, which Mancia described as their maximum. They ultimately bought a home for less than that.

But getting the house required them to accept terms they knew could cost them more money.

“When we played the game, we ended up spending over $18,000 more than what we had planned for because we did an appraisal contingency,” Mancia said.

“So the bank appraised the house lower, and we knew that if there was a gap, we were gonna have to cover it,” she said. “So that was $18,000 more.”

The couple also waived the inspection.

Mancia said that was something they had debated after making their first offer on another home. They talked to family members and tried to understand the risks.

“You kind of just have to be very informed and very cautious,” she said. “Like, if you’re not gonna do it, then you have to either get somebody to look at the house with you when you walk through it, or just know what to look at in terms of the condition of the house.”

Sacco said she would not recommend buyers waive a home inspection.

“I’m not scared of what I can see. I’m scared of what I can’t see,” she said.

Koch said she is seeing buyers face similar decisions in the Nazareth area, including offers that waive contingencies or agree to cover a gap between the purchase price and a home's appraised value.

“A couple years ago, I would have never talked to them about buying it using an appraisal gap, waiving inspections,” Koch said.

She said she still does not advise buyers to waive inspections, but if a buyer chooses to do so in a competitive situation, she encourages them to take other steps to understand the property, such as bringing a knowledgeable family member or contractor to a second showing.

Mancia said the couple did walk away from some homes during their search.

One was a renovated property in Bethlehem that she said did not feel like a good value.

The house also had been relisted and had sat on the market, she said.

For Mancia, the experience reinforced the importance of understanding the market before beginning a home search.

“I would tell the average home buyer to try to get some insight on what the market is like when they’re buying, so that they don’t go completely blind,” she said. “Just know what you’re getting yourself into.”

A market of micro-markets

The latest housing data shows why Sacco said location matters so much.

Lehigh and Northampton counties had about 1.6 months of inventory in July, with homes averaging 17 days on the market. Carbon County had three months of inventory, and homes there averaged 30 days on the market.

The differences can be even more pronounced from one municipality or school district to another, Sacco said.

“School districts really are driving forces,” she said.

The July data showed a wide divergence across the Valley – average sales prices are up 19.9% in Nazareth and 14.4% in Southern Lehigh, but down 12.6% in Catasauqua and 7.4% in Northern Lehigh.

Koch said the Nazareth area has continued to attract strong demand because buyers are competing for a limited number of homes, particularly among families who have a specific connection to the district.

“There’s been so much demand from buyers, and that’s driving that median sales price up significantly,” Koch said.

She said some buyers are being priced out of neighborhoods where they have lived for years, while others are broadening their searches as they try to find a home they can afford.

Mancia said the school district was one of the factors that made the Catasauqua-area home attractive to her family.

The couple had been looking at several areas, but the particular district was important enough that it influenced how much they were willing to compromise on other parts of the deal.

“If it was the right area, the right school district, and it’s nearby from where we are, then we would be willing to do the extra contingencies,” Mancia said.

Koch said school districts can be important for reasons beyond the schools themselves. Some buyers want to remain near parents or other relatives who can help with child care, for example.

She recently had four offers on a listing in Bushkill Township in the Nazareth Area School District. Koch said two of the buyers who did not get the home specifically wanted to be in the district.

“There’s stories behind each sale, of course,” Koch said. “Especially those first buyers, they want – they’re competing with cash buyers first of all, and then the buyers, they’re being priced out of the neighborhoods that they’ve lived in for years.”

Sacco said the same forces are helping create pockets of intense competition throughout the region.

A home in the right location, in good condition and priced correctly can still attract multiple offers.

But sellers shouldn't assume that a record median price means they can automatically command that price for their own property.

“Record pricing is great, but the real story here is still lack of inventory,” Sacco said.

There were 870 homes available for sale in July, down 4.8% from a year earlier. New listings increased 3.4% to 832, but supply remains tight.

Pending sales increased 8.1% to 642, while closed sales dipped 0.8% to 693. Homes sold in an average of just 17 days, and sellers received an average of 101.4% of their listing price.

Buyers are broadening their searches

The lack of inventory also is changing where buyers are willing to look.

Sacco said she is seeing buyers who once wanted to remain in the Lehigh Valley expand their searches to the Poconos and other areas within roughly an hour's commute.

Koch is seeing a similar pressure among buyers who want to stay in particular school districts but are finding that competition is forcing them to stretch their budgets.

“If they say, oh, their max is $550,000, they’re now saying, OK, we’ll go to $575,000” Koch said. “They don’t want to, but there’s nothing else out there.”

Those buyers may find less competition by looking outside the areas that attract the most demand.

“I think there’s maybe less competition,” Sacco said. “The Lehigh Valley market is really strong and very competitive, but buyers have just become more selective.”

That selectivity is showing up in negotiations, too.

Sacco said she is seeing home inspections return after becoming much less common during the most competitive portion of the market.

“For the first time in six years, I have an agent – some of my new agents have never had to negotiate a home inspection before because they went away,” she said.

She said she was glad to see them return.

“This is a big purchase, and I certainly do not want any of my buyers to buy a house without a home inspection,” Sacco said.

Koch said buyers are also using other strategies to make their offers more competitive, including escalation clauses that allow them to automatically increase their offer up to a predetermined limit if another buyer submits a higher bid.

She said buyers can also consider putting down a larger earnest money deposit when they are comfortable doing so.

The affordability squeeze

For some buyers, like Mancia, the cost of renting is becoming another reason to consider homeownership.

Sacco said she is hearing concerns about the cost of apartments while buyers also try to save enough money for a down payment.

“I just wish there was more affordable housing,” she said. “I look at, you know, my parents and now I look at my children. How are they going to be able to afford that kind of rent, and then a down payment on a house and all of that.”

Koch said she has also seen rental costs push people toward homeownership.

She said rents rose after the COVID-era migration into the region, while some landlords have also tightened their requirements for prospective tenants.

“I’ve seen a lot of landlords for renting. They want to see a 700 credit score. They want no pets, no smokers, no, you know,” Koch said. “It’s tough. It’s really tough.”

Mancia's family ultimately made the decision to buy in part because of their rent.

Mortgage rates were a consideration, but she said they did not determine when or where the couple bought.

They had watched rates rise and did not expect them to fall significantly, so they decided to move forward.

The process moved faster than Mancia expected.

“I thought it would take a lot longer,” she said, particularly when it came to the paperwork involved in buying a home.

The couple's search lasted only about a month.

Mancia said that was partly luck, but preparation also mattered.

“If I didn’t know what I was gonna get myself into, then I think I would have had a much harder time,” she said. “Mentally, it just would have been a lot worse.”

Sacco said buyers should focus on understanding what they can afford rather than trying to predict where mortgage rates or home prices will go next.

As for whether the region's median price will cross $400,000, she isn't willing to make that prediction.

“I don’t know. I mean, when I got in the business, the average sale price back in ’99 was about $110,000,” Sacco said.

The market has changed dramatically since then, she said, but nobody knows where the ceiling is.

“I can’t predict,” Sacco said. “Will it appreciate? I don’t know. I mean, is there a ceiling? I don’t know. Who knows? Nobody knows.”

For now, the fundamental problem remains the same: There aren't enough homes available for the number of buyers looking.

“As long as we have that demand, and we still have a lot of buyers chasing just a few homes, we’re going to continue to see this pressure all across the Lehigh Valley,” Sacco said.