The number of purchase contracts signed by New Jersey homebuyers in July increased 24 percent from last year, according to a recent report by Otteau Valuation Group Inc.
The increase continues a positive and growing trend for the state's housing market, the East Brunswick appraisal and consulting firm found. July marked the 10th consecutive month that pending sales have grown, and year-to-date purchase activity through the month was up 23 percent from the same period in 2011.
Jeffrey Otteau, the firm's president, said the strong activity has been driven by low interest rates, loosening mortgage qualification standards by banks and rising apartment rents. With those factors, along with an improving economy and stabilizing home prices, he said, "the public gets the sense that it's safe to cross the road again."
"When we see increases that are this large … it means that it's real and it's likely durable, meaning it's not something that's likely to go away," Otteau said, as opposed to increases of 4 percent or 5 percent.
He said the purchase contract statistic is the market's most important indicator "when you combine (it) with what's happening to the number of houses that are available for buyers to choose from." To that end, Otteau's report also identified a 17 percent drop in unsold inventory, to just under 60,000 homes statewide, the lowest total since 2005.
Purchase contract data have been improving monthly since May 2011, except for last August, when activity was flat, and September, when the figure slipped by 1 percent.
Otteau also tempered the enthusiasm of the report, as "there's no question that there are still headwinds out there." He pointed to a job recovery that has been losing steam and the uncertainty over how New Jersey's backlog of foreclosures will affect the market.
Still, there are reasons to be optimistic, Otteau said.
"At the end of the day, there's a lot of pent up demand out there," he said. "People who have not bought for the last three years who have been sitting on the sidelines — I think that's going to be the story for the rest of the year."