Housing construction in New Jersey “is poised to accelerate and, in doing so, provide further impetus to the state's economy,” according to Pat O'Keefe, director of economic research at the accounting and consulting firm CohnReznick.
O'Keefe said state government data shows New Jersey homebuilders obtained 2,261 building permits in July, the third-highest monthly total in five years.
He said year-to-date, residential approvals are running almost one-third ahead of the comparable period in 2012.
"Despite month-to-month fluctuations, the state's housing recovery appears to be gathering momentum," O'Keefe said.
Rutgers economist Jim Hughes concurred with O'Keefe's assessment of the housing picture in New Jersey.
The resurgence of multifamily housing construction over the past two or three years has been a major factor, driven by demand from both baby boomers and their grown children.
Baby boomers, "in many cases, are getting rid of their single-family homes, and are trading down" to rental units because they are empty nesters who don't need the space, or they don't want to be tied down geographically.
And, he said, "We have a huge number of 20-somethings and young 30-somethings, and they are primarily a rental housing generation. Some of them may want to buy homes, but with the new stricter (mortgage) requirements they can't — but in other cases, they are delaying household formation. They want to be mobile and they want to be near activity centers."
O'Keefe noted that permit data tend to be volatile month-to-month and also reflect season variations.
"Taking account of those factors — by using a three-month moving average of seasonally adjusted data — residential construction in New Jersey is the strongest it has been since August 2007," he said.
O'Keefe said residential construction permits are almost triple the mid-2009 bottom of the housing contraction, but despite this year's gains, they are more than a third below the peak of 2005 peak prior to the 2008 financial crisis.
Hughes said the housing resurgence will help the economic recovery. Since 2010, "each year has been successively better than the preceding in private sector job growth, and we did that while the housing market was still moribund," he said. "Now, I think housing will be a positive addition to the economic momentum."
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