Strong demand from buyers and low inventories of single-family homes continue to boost real estate prices in markets across New Jersey as the summer season approaches. Markets remain strong despite the recent uptick in mortgage rates.
Recently, the Freddie Mac fixed rate 30-year mortgage loan rate increased to 5.30%, the highest rate since 2009. The anticipated increase in mortgage rates caused a rush of closing activity during the month of April, as buyers scrambled to lock in mortgage rates before the increase.
As we head into summer market full swing, inventories are expected to remain low in most markets throughout the state. New data from Realtor.com shows that housing inventories remain near historic lows compared to previous years.
In New Jersey, inventories are starting to rise in some areas. A new report from Realtor.com shows that the number of homes on the market have increased the most in Middlesex, Monmouth, and Bergen counties. Despite these increases, year over year inventories remain extremely low in the majority of markets in the state.
What does this mean for prices? Scattered markets throughout the U.S. are starting to see a decline in housing prices in response to higher mortgage rates. This decline has not reached all markets, however, and prices remain strong in many NJ markets. Higher mortgage rates will likely push some buyers out of the market and will certainly lower buying power for some prospective home buyers. But the reality is that there are many buyers waiting for houses to come on the market, including cash buyers who are not affected by mortgage rate increases.
Demand from first-time home buyers and millennials remains strong, particularly for homes with three or more bedrooms and outdoor living spaces. In many NJ markets, even houses that need work are still largely selling above asking price, and multiple offers remain the norm in many markets and areas. As a result, buyers will need to remain flexible in terms of features they are looking for in a home.