From the Otteau Group:
NJ Purchase Contracts Rise Again in May
Home purchase demand in New Jersey increased for the 21st consecutive month in May rising to nearly 11,000 home-purchase contracts. This was the highest number of purchase contracts recorded in the month of May since 2005, reflecting a 9% increase compared to the same month one year ago. Considering the 15% increase (y-o-y) in May of 2015, home sales in the month of May have increased by more than 24% over the past 2 years.
On a year-to-date basis (January-May) home purchase demand in New Jersey continues to expand, increasing by 17%. 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 by 3%. 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 continues to be relatively low which is limiting choices for home buyers. The number of New Jersey homes being offered for sale declined by more than 4,000 (-7%) in May compared to one year ago. This is about 21,000 (-28%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 4.8 months of sales (non-seasonally adjusted), which is lower than one year ago when it was 5.7 months.
Currently, the 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 County is presently experiencing the strongest market conditions in the state with fewer than 3 months of supply, followed by Essex, Morris, Union and Somerset 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 (10.1), Cumberland (10.7) and Atlantic (11.6).