NJ Home Prices Have Largest Quarterly Price Increase Since the Recovery Began
The combined effects of increased home purchase demand and tight inventory levels is causing continuing home price increases in New Jersey. Median home prices in the state rose by 6.4% in Q3 compared to one year ago. This marks the largest rise since the housing recovery began and is the 4th consecutive quarterly increase. The median home price in New Jersey increased to $315,693 in Q3 up from $296,679 one year earlier. At the same time, the available supply of homes being offered for sale remains low with a decline of 5,000 homes (-9%) over the past year and 16,000 (-31%) over the past 2 years.
The higher home prices coupled with a rise in mortgage interest rates over the past 6 months has reduced the affordability of home ownership for the 3rd consecutive quarter. The affordability index in New Jersey declined to 114% in Q3, its lowest level since Q2 2011. This means that a home buyer today earning the state’s median income of $66,692 is able to afford a home that is priced 14% higher than the state’s median home value of $315,693. Another effect of the higher level of home buying is that the homeownership rate in New Jersey increased slightly to 65.2% in Q3.