As I reflect on 2021, one thing is clear — it's been quite the year in real estate! Throughout the U.S., we saw multiple real estate records topple, many of which had stood for decades. According to Realtor.com, home prices have risen 13.5 percent since the pandemic began in Spring 2020, driven by surging demand and low inventory. Morris County specifically outpaced that national average with New Jersey Realtors data showing a 17.7 percent increase in median sale prices. Underscoring the push-pull relationship between supply and demand, we've seen the number of single-family homes sold through September 2021 jump 14 percent compared to 2020, while new listings fell 8 percent year over year in the county.
As the year winds to a close, we're seeing a cooldown from the white-hot summer. In Summit, the number of days on market has ticked up since last October, and we saw a 30 percent decrease in new contracts YOY. Median sales price reached $933,000 in October 2021, a 17 percent increase from last year, and sellers are continuing to achieve their full asking price. In Chatham Borough, median sales prices reached $1 million in October, a modest 5 percent increase from last year, and new listings fell 21 percent. In neighboring Chatham Township, the market is still brisk, with a 30 percent reduction in days on market. The median sales price in October 2021 skyrocketed 39 percent YOY to $877,000, with sellers achieving full asking prices. Even with the traditional year-end slowdown as we enter the holiday season, 2021 will go down as one of the strongest years in real estate in recorded history.
So, what lies ahead? Several economic and market factors indicate a strong but far less frenzied path ahead. Leading the cool-off is the lingering issue of low supply across the country. This is especially a factor in the lower end of the pricing spectrum, creating a challenge for first-time buyers who were unable to enter the market during the unprecedented pandemic buying charge. Stagnant new home construction is compounding the housing inventory issue, with workforce shortages, skyrocketing materials costs and global supply chain problems wreaking havoc in the industry.
Experts agree that the era of record-low interest rates is likely heading to an end, with rates expected to tick up next year. While the Fed has acted cautiously thus far, decreasing COVID cases and rising employment, consumer spending and fears of inflation will force its hand sooner rather than later. According to the average prediction of experts across organizations like the National Association of Home Builders, Fannie Mae and the National Association of Realtors, mortgage rates will hover around 3.14 percent by the end of 2021. It's important to remember that that's still uncharacteristically low and far from the 5 percent rates that were commonplace just three years ago.
These forces, combined with continued interest from buyers, should create a strong but far more manageable real estate landscape in 2022. Pent-up demand will unwind, supply-chain issues will resolve, and cooler heads will prevail, drawing the elusive "return to normal" closer than ever.