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The reasons why N.J. home sales plummeted 22% last year

Low inventory and the highest interest rates in two decades caused home sales to decline 22% in New Jersey in 2023, according to data from New Jersey Realtors.

That follows a 20% decline in home sales in 2022, according to data from the Otteau Group.

Closed sales for all market segments totaled 84,305 in New Jersey in 2023, a 22% percent decline from 2022.

The townhouse and condo market segment saw the biggest decline in closed sales, dropping 24% in 2023 compared with 2022. The 19,175 closed sales in 2023 represented a 6,063 decline from 25,238 in closed sales in 2022, according to New Jersey Realtors.

There were 23.2% fewer single family home closed sales in 2023, and the market of housing for people 55 and older had 6.2% fewer closed sales.

“It has nothing to do with people not buying,” said Gloria Monks, president of New Jersey Realtors and a broker associate with Compass in Princeton. “There’s no inventory. When we get good inventory, it does sell.”

New listings in New Jersey were down 20% in 2023 compared to 2022. There were 107,517 new listings in 2023, down from 134,643 in 2022. Of those new listings, the majority, 71,701, were single family homes, according to New Jersey Realtors’ data.

Unsold inventory in New Jersey fell to 10,500 homes on the market as of January, compared to 12,900 a year ago, according to data from the Otteau Group.

Homeowners don’t want to sell existing property they may have a mortgage on when rates for a new 30-year mortgages are now more than 7%, as many who purchased a property before mortgage rates increased have a note with an interest rate below 4%.

“After rates start to move closer to 5.5%, or get below 5.5%, we’re going to see existing homeowners more willing to put their houses up for sale,” said Jeffrey Otteau, a real estate economist who heads the Otteau Group.

New Jersey should see an increase in the number of houses on the market by Memorial Day or the second quarter of 2024, he said, if interest rates fall, as expected.

But the 2024 market is off to a slow start. In Randolph, in Morris County, prior to 2020, inventory was about 130 homes for sale at this time of year. In the spring market, inventory would rise to about 160, according to Missy Iemmello, a broker sales associate and Weichert Realtors’ branch vice president, whose agents work in Morris, Sussex, Warren, Bergen and Essex counties.

There are currently 13 active listings in Randolph.

“This is the lowest I have seen in my career, since 2006,” Iemmello said. “I believe we are at the bottom and will start growing inventory, but I think it will be a slow uphill climb.”

The decline in sales is having an impact on the real estate profession.

“There are a lot of agents making decisions about whether to keep their license active or go into a referral service,” said Beth Kimmick of ERA Central Realty in Cream Ridge. With a referral service, they can’t actively sell but they can refer clients to other agents who will then pay them a small commission.

“It’s expensive to have a license and if you’re not doing business, it can be the world’s most expensive hobby,” she said.

Are you an agent, buyer or seller who is active in this changing market? Do you have tips about New Jersey’s real estate market? Unusual listings? Let us know.

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Allison Pries may be reached at apries@njadvancemedia.com.

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