New Jersey Homebuyers Face Steep Challenge as Market Remains Tight

The number of homes for sale on the market fell for the fourth straight month in October as the already severe housing shortage persists nationwide.

In New Jersey, the shortage is even more extreme, with the number of homes for sale down 41.8% from pre-pandemic levels in early 2020, according to a new report from Realtor.com. This is worse than the national average of 36.3%.

The lack of available homes for sale is keeping prices uncomfortably high in New Jersey, even though mortgage rates are hovering near the highest level in two decades. The median listing price in New Jersey is $390,000, up 15% from a year ago.

Despite the high prices and rising mortgage rates, there are still some eager buyers in the market. The median number of days a home is on the market in New Jersey is down to 20 days, from 27 days a year ago.

However, for many buyers, the New Jersey housing market is simply too expensive. The monthly cost of financing a typical home in New Jersey has increased by about $166 per month, or 7.4%, since October 2022. That means in order to purchase a median-priced home, income needs to increase by $6,600 to $120,000.

Nationwide, total inventory rose 5.1% in October from the previous month, even though typically the number of homes for sale declines in the fall. But the total number of homes for sale is still down 4% compared to last October.

Sellers who locked in low mortgage rates before the pandemic have been reluctant to sell, leaving few options for eager would-be buyers. This dynamic has kept prices high even as mortgage rates rise.

Rates on 30-year fixed mortgages are around 7.76%, according to Freddie Mac. This is well above the pre-pandemic average of 3.9%.

The housing shortage shows no signs of abating soon, especially in high-demand markets like New Jersey. For buyers, patience and persistence may be required.