The state of New Jersey is still reeling from a struggling housing market with 9.3% of its mortgage debt holders '90 or more days' delinquent on home loans.

That number is three-percentage points above the national delinquency rate, said William Dudley, president and CEO of the Federal Reserve Bank of New York.

Dudley's report on the state of New Jersey's economy comes at a time when the Sand States of California, Nevada, Arizona and Florida are pulling out of a deep housing crisis.

Arizona home prices in August edged up 2.7% over last year while unemployment declined from 9.6% in 1Q to 8.2% in the most recent report.

Herein lies the problem for New Jersey. Unlike recovering states like Arizona, New Jersey lacks significant jobs improvement.

Dudley confirmed during a speech to the Morris County Chamber of Commerce in Florham Park, N.J.,that "July's reading of 9.8% (unemployment in New Jersey) puts the state's rate" well above the U.S. unemployment rate of 8.1%.

The high unemployment and mortgage delinquencies in New Jersey highlight a market that is struggling to come back even as other hardest hit states like Arizona, California and Florida continue to see falling inventories and upticks in home prices.

A brighter recovery may be alluding New Jersey, but Dudley recognizes improvements taking shape nationally.

"One brighter spot has been the housing market," he said. "Housing starts and sales of new and existing single-family homes are trending up gradually. Nationally, home prices have stabilized and begun to rise modestly after falling roughly 30% from their 2006 peak."

But, New Jersey remains more challenged by its employers cutting 250,000 jobs in the downturn – a 6% loss, Dudley said. And since the start of the recovery, less than one in four of those lost jobs has returned.

Professional-business services, education, health care and leisure saw moderate job gains in New Jersey this past year, but the state is still losing manufacturing and construction positions, Dudley noted.