Low New Jersey Mortgage Costs Signal Market Rebound

This just in:

Now is the time to apply for a home loan in the Garden State.

Why? The number of homes contracted for sale in December moved into positive territory for the first time since August 2005, according to a new report released by the Otteau Valuation Group, an East Brunswick, N.J., firm that tracks the New Jersey housing market.

In December, contract sales activity ran 2 percent higher than December 2005, “providing solid evidence that home buyers are begin ning to re-enter the housing market in response to lower home prices and continued low mortgage interest rates,” Otteau said.

The Newark Star Ledger quotes Otteau as describing “the most positive sign for the New Jersey housing market in more than a year.”

The housing market’s performance in December marks the first time in 16 months the housing market experienced a higher volume of monthly sales activity than the prior year.

Still, not all is well on the housing front.

While New Jersey mortgage costs remain low, another key indicator of market strength is the Unsold Inventory Index, which measures how many months it would take to sell the existing inventory of active listings at the present sales pace.

That figure in New Jersey currently stands at a 10.6 months, as compared with 7.8 months one year ago, which far exceeds the balance point at which home prices will rise.

Therefore, while recent market improvements may signal the end of the housing decline, the high days on market figures suggest we should not interpret this as a return to higher prices.

The conclusion:

“Keep in mind that these improvements have been fueled primarily by lower home prices suggesting that realistic pricing remains key to successful home marketing,” he said.