From the Otteau Group:
MarketNEWS October 31, 2016 Edition
NJ Purchase Contracts in September Strongest in over 11 Years
In September, the number of contract purchases by homebuyers exceeded the same month in the prior year for the 25th consecutive month, reflecting a 12% increase over September 2015. Considering the 15% increase (y-o-y) in September of 2015, home sales have increased by 28% over the past 2 years. This latest gain was the highest number of purchase contracts recorded in the month of September of the past 11 years.
On a year-to-date basis (January-September) home purchase demand in New Jersey increased by 14%. This increase has however been largely concentrated in lower priced homes as first-time ‘Millennial’ buyers begin to transition from rentership to homeownership. By comparison, the number of luxury home sales priced at $2,500,000 and above declined by 4% this year. Reasons for this trend include a greater number of younger-age first home buyers, trade-down purchases by older-age empty-nesters, and relaxed mortgage lending standards which have reduced minimum down-payment amounts.
Shifting to the supply side of the equation, the supply of homes being offered for sale remains constricted, which is limiting choices for home buyers. The number of homes being offered for sale today in New Jersey has declined by nearly 6,000 (-11%) compared to one year ago. This is also about 25,000 (-34%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 5.4 months of sales (non-seasonally adjusted), which is lower than one year ago when it was 6.7 months.
Currently, the majority (81%) of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Hudson County is presently experiencing the strongest market conditions in the state with just 3.2 months of supply, followed by Union, Essex, Morris, Middlesex and Somerset Counties, which all have fewer than 4.5 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 (9.2), Salem (10.1), Cumberland (10.3) and Atlantic (10.5).