From the Record:
New Jersey builders have put on the brakes, cutting housing starts by 21 percent this year, the National Association of Home Builders said Tuesday.
The builders are responding to a drop in demand from buyers.
“The real estate market is in a severe and continuing contraction,” said Patrick O’Keefe, president of the New Jersey Builders Association.
The housing downturn follows a boom that saw New Jersey house prices rise by about 85 percent in the first half of this decade. That far outstripped the rise in household incomes, O’Keefe said, “leading to an affordability problem that inevitably led to a contraction.”
And mortgage lenders, who offered low interest rates and easy borrowing terms a couple of years ago, have tightened their standards, making it harder for first-timers to enter the market.
A decline in sales of existing homes has hurt home developers, because many of their would-be buyers can’t move till they unload their current homes. To attract buyers, builders are offering incentives and cutting prices.
“People still want to buy homes; all you have to do is hit the right price,” said Doug Fenichel, a spokesman for Red Bank-based Hovnanian Enterprises Inc., the state’s largest home builder.
According to the NAHB State Starts Forecast, about 24,800 housing units will be started this year in New Jersey — down significantly from the 31,400 housing starts of 2006 and the 35,000 of 2005. And builders are expected to keep production low in 2008, with about 24,200 housing starts.
O’Keefe said that estimate may be a bit high. He anticipates only about 22,000 housing starts in the state this year and 20,000 next year.