New Jersey Real Estate Report

From CNBC:

Realtors report a ‘new housing crisis’ as January home sales tank more than 8%

High home prices, faltering supply and weaker consumer confidence in the economy all continue to weigh on the U.S. housing market. The chief economist for the National Association of Realtors, Lawrence Yun, is calling it “a new housing crisis.”

Sales of previously owned homes in January dropped a much wider-than-expected 8.4% from December to a seasonally adjusted, annualized rate of 3.91 million, according to the NAR. Sales were 4.4% lower than January 2025. That is the slowest pace since December 2023 and the biggest monthly drop since February 2022.

This count is based on closings, so contracts that were likely signed in November and December, when the average rate on the 30-year fixed mortgage didn’t move much before dropping slightly in January. That rate is now 6.1%, according to Mortgage News Daily. 

Regionally, sales fell across the nation month to month but were down the most in the South and West. 

“Affordability conditions are improving, with NAR’s Housing Affordability Index showing that housing is the most affordable it’s been since March 2022,” Yun said in a release. “This is due to wage gains outpacing home price growth and mortgage rates being lower than a year ago. However, supply has not kept pace and remains quite low.”

But he also noted on a call with reporters that potential buyers are “still struggling,” and “renters are not participating in housing wealth.” He characterized the current market as a crisis because, “the movement is not happening. Americans are stuck.”

Inventory came down in January from December but was still up 3.4% year over year. There were 1.22 million homes for sale at the end of January, which at the current sales pace is a 3.7-month supply. A six-month supply is considered a balanced market between buyer and seller.

Tighter supply kept home prices in positive territory. The median price for a home sold in January was $396,800, up 0.9% year over year and the highest January price on record.

From Fortune:

We may be looking at the housing affordability crisis all wrong. Higher earners are driving home prices, not lack of supply, researchers say

According to a recent note written by UC Irvine PhD student Schuyler Louie along with San Francisco Fed researchers John Mondragon, Rami Najjar, and Johannes Wieland, average income growth “relates strongly” to house price growth.

“However, there is almost no connection between average income growth and growth in housing supply,” they added. “Instead, housing supply growth has a strong positive relationship with population growth. In fact, almost all metro areas saw housing units grow faster than their population—even in expensive residential markets like Los Angeles or San Francisco.”

That challenges deeply ingrained notions that NIMBYism, red tape, and politicians who favor rent controls over new construction are worsening the housing affordability crisis. 

Meanwhile, California’s pricey housing markets have been held up as a prime example of these trends and often contrasted with those in Texas, where homes are more affordable. 

To be sure, California is expensive to live in, fueling homelessness and migration out of the state. But given that supply was not a factor, the researchers took a closer look at how differences in demand affect home prices.

Drawing on data going back to the mid-1970s, they pointed out that house prices and median income tracked each other closely until 2000. But after that, home price growth far surpassed incomes.

“This research indicates that regulatory reforms may have limited impact on housing affordability and that   differences in housing supply constraints are not the fundamental drivers of differences in housing dynamics across metro areas,” they said.