The real estate market in Hillsborough took a step back in September, unlike the Somerset County market as a whole.  Part of the problem is the fact that Hillsborough right now has nearly a quarter of its listings in the $750,000+ price range, a range not noted for its strength currently.  Additionally, of those 60 or so listings above three-quarters of a million dollars, the overwhelming majority are new construction, including Toll Brothers developments, a Beazer Homes development, and several smaller builders with big expectations.  As a consequence of this relative glut of new construction (which builders re-submit to the MLS periodically), the absorption rate has risen to 10.2 months, compared to 7.8 months last year, the supply/demand ratio has sunk to 39%, compared to 55% last year.  That includes re-sales as well as new construction.

However, there is good news in the market.  Last year at this time the entry-level (under $300,000) was in bad shape.  There were 88 listings and just 12 pendings at that time.  This year, entry-level homes are selling much better - with 87 active listings, there are 35 pendings - nearly three times the number of October 2008.  That price level and the next one up ($300-500,000) are now very strong.  This activity suggests that the first-time home buyer tax credit plan is working, driving the market for entry-level and first trade-up buyers.

Generally, if the new construction is factored out of the market in Hillsborough, the absorption rate is a couple of months better.  And just to make a point of why to factor it out, builders may put in their entire development - anywhere from a handful to fifteen homes - in essence, competing with themselves, and increasing absorption rates and decreasing supply/demand numbers.

Anyway, the Hillsborough market bears watching over the next couple of months, since there usually is a seasonal retreat, but there may be an improvement over the market of a year ago.