The Morris County housing market softened in the third quarter of 2016, with sales up modestly and prices mixed.
Sales. Morris County sales were up only slightly, rising about 4% from the third quarter of last year. Even that tepid increase, though, was enough to continue a two‑year streak in which year‑on‑year sales have gone up for eight straight quarters. The long‑term trend is also relatively encouraging, with sales up 9% for the rolling year.
Prices. This sustained increase in sales, though, has not yet had its expected impact on pricing. Prices were mostly mixed, with the average up a tick and the median down slightly. For the year, the results were a little more discouraging, with the average falling over 2% and the median down over 1%. And after some meaningful price appreciation in 2015, we have now seen prices down for most of this year. This was a little surprising, given that we’ve seen sales activity up for almost two years. Normally, rising sales activity should drive appreciating prices.
Inventory. The good news for Morris homeowners and sellers is that inventory continues to tighten. In the industry, we generally consider anything below six months of inventory as a signal for a “tight” market, leading to multiple offer situations, bidding wars, and ultimately appreciating prices. By that measure, we are certainly moving toward a seller’s market, with Morris now down to 7.3 months of inventory, falling almost 22% from last year.
Negotiability. The negotiability indicators showed only modest signs that sellers might be gaining leverage with buyers. The days‑on‑market indicator was relatively flat, falling by five days. And the listing retention rate was up just a tick, indicating that sellers might be having a bit more success getting buyers to meet their asking prices.
Going forward, we expect that Morris County’s sales activity will eventually have a meaningful impact on pricing. With homes still at historically affordable prices, interest rates low, and a generally improving economy, we believe that buyer demand will strengthen and eventually drive modest but meaningful price appreciation in 2017.