From the April MarketNews from Otteau Group:
NJ Purchase Contracts in March Strongest Since 2005
Home purchase demand in New Jersey increased for the 19th consecutive month in March, rising to more than 10,000 home-purchase contracts. This reflects a 23% increase compared to the same month one year ago. The March tally was also the most during that month since the cyclical high in 2005 at the end of the subprime mortgage boom.
On a year-to-date basis (January-March) home purchase demand in New Jersey continues to expand, increasing by 21%. The majority of this year’s increase has been concentrated in homes priced below $400,000, as first-time ‘Millennial’ buyers begin to transition from rentership to homeownership, while the number of contracts concentrated in luxury homes priced higher than $2,500,000 has declined.
The imbalanced distribution of purchase contracts across the prices ranges has caused the statewide median home price to decline for the last three quarters. In Q1.2016, the median home price was $269,493, which was down by 2.7% from $276,915 one year earlier
Shifting to the supply side of the equation, the supply of homes being offered for sale continues to be relatively low which is limiting choices for home buyers. Unsold inventory in the state has however been slowly rising for the past 2 months, increasing by nearly 1,100 homes (2%) compared to one year ago. This is still about 23,000 (-31%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 4.9 months of sales (non-seasonally adjusted), which is lower than one year ago when it was 5.8 months.
Currently, the vast majority (86%) of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Hudson is presently experiencing the strongest market conditions in the state with fewer than 2 months of supply, followed by Union, Essex, Somerset, Morris and Middlesex Counties, which all have fewer than 4 months of supply. None of the counties have an unsold inventory level equivalent to a supply of 12 months or greater, however those with the largest amount of unsold inventory are concentrated in the southern portion of the state including Cape May (9.4), Salem (9.9) and Atlantic (10.9).