"The lady who has died was using her own equipment and was making her first sky dive in this country, having previously made parachute jumps abroad.
"We will be working with the HSE and the British Parachuting Association to establish why this tragedy happened."
The incident happened 400m from a skydiving centre.
Residents carried out CPR on the woman before paramedics arrived.
The witness, who did not want to be identified, was having a cup of coffee in his garden when he saw a group of parachutists jump out of their plane.
"I see them every day so I don't take much notice but this one made me look up," he said.
"I could hear a fluttering noise and it sounded unusual.
"I could see it was not the main parachute, because they're massive.
"It was so close to the ground."
The man said the parachutist was not moving before she hit the ground, as she had her arms and legs spread.
"I honestly thought it was a dummy because there was no movement from her," he said. "She looked as though she was unconscious.
"She was not screaming.
"All I can see is her spinning like a top."
A paramedic from the skydiving club was quickly on the scene.
The witness said a friend of the parachutist was also quickly there and was distraught.
The Great North Air Ambulance Service helicopter landed on a green on a nearby new estate and flew her to the James Cook University Hospital, Middlesbrough.
Durham Police said the woman later died from her injuries in hospital.
