Interest rates have remained near current levels since as far back as mid-May which makes more buyers eligible for financing. However, the low rates can’t produce more inventory as July home sales are down -7.2% from the same time last year, this according to the New Jersey Association of Realtors. Let’s take a look at this month’s numbers and dissect them for you.
According to the report, single family home sales fell -7.2% to 7,154 units in the state while the median single family home price stabilized at $345,000. For all properties in New Jersey including condominium/townhome and adult communities, the median sales price actually increased 1.6%. The demand is certainly there it’s simply that lower inventory is keeping some home buyers on the sidelines.
Compared to July 2013, new listings for single family homes throughout New Jersey increased by 8.4% to 11,971 from 11,040 and pending sales, those with contracts not yet closed, tallied 6,549 for July 2014 compared with 6,421 last year, for a 2.0% bump. The number of days it takes to sell a typical home in New Jersey fell yet again from 80 days to 72, representing a 10% drop, a rather remarkable number and available inventory shrank as well by -3.9% to a 9.8 month supply of existing single family homes for sale. The town home and condo markets fared in the same manner, with 2,068 units sold and days on market fell by -17.6%, continuing this trend.
Central Jersey Data
Here in central New Jersey, new single family listings increased by 14.1% compared to July of 013 while the number of closed sales fell to 312 homes, a -17.5% drop. There are more listings in July of 2014 but the demand is still strong. The median sales price for a single family home rose yet again from $477,500 to $520,000 for an 8.9% gain. It’s not taking very long to sell a single family home either as the average number of days it takes to sell a listed home fell to 62 days from 67 in July of 2013.
The national economy is still showing continued signs of gradual strength. The Q1 GDP number actually fell by -1.1% yet the Q2 number showed a 4.0% rise for a 5.1% change. That surprised many economists and the initial Q2 reading was thought to have been some sort of an anomaly but the report was confirmed when the revised GDP account actually rose 4.2%.
This along with fewer weekly jobless claims along with a continued increase in home values nationally should cause rates to rise rather than remain neutral. That’s because investors are paying more attention to geopolitical events in Ukraine and the Middle East and putting more funds into lower-yielding yet safer U.S. Treasuries and mortgage bonds keeping mortgage rates low.
And speaking of mortgage bonds, the Fed announced another reduction in the monthly QE stimulus and announced there will be no indication of an extension of the program. The Fed is currently buying $25 billion in Treasuries and mortgage bonds with the final phase out due in October. So far, investors have paid little attention to the ultimate end to the program which has helped keep rates so low for so long. Until worldwide skirmishes subside it’s quite possible interest rates will remain in their current range well into Q4.