Prospects for Interest Rates and New Jersey Real Estate in 2025 and 2026

North Jersey, Central Jersey, and South Jersey make up New Jersey’s ever-changing real estate market. In terms of interest rates and buyer demand, various places react differently to economic developments.

In 2025, mortgage rates remain 6.5% to 7%, making homebuying pricey. The state market, house affordability, and inventory have changed due to increasing rates. Smart real estate purchases, sales, and investments require local market trends.

Interest Rate Trends and 2025 Forecast

Mortgage Rates

Most U.S. mortgage rates in July 2025 are 6.5%–7%. Though lower than the 2023–2024 peak, this is still much greater than the 3% to 4% rates in 2020 and 2021.

There are several reasons for this steady rise in interest rates:

• The Fed keeps rates high to control inflation.

• With solid wage and job growth, reducing rates is less necessary.

• Global wars and the election cycle make the market volatile.

For 2025 and 2026

Professionals predict rates will exceed 6% until 2025. If inflation slows further, mortgage rates may drop to 6%–6.5% by year’s end. In 2026, rates might go down even more, with some predictions putting them closer to 5.5%. However, they won’t be back to the historically low levels seen during the pandemic.

How Interest Rates Are Changing the Way People Buy Things

Having more money to spend is directly affected by high interest rates. For instance, someone buying a $500,000 house with a 7% mortgage rate pays about $700 more each month than someone with a 5% rate.

For People Who Want to Buy a House

It’s harder to become a landlord because it costs a lot to borrow money. Condos and houses are cheaper options for people who want to buy a home for the first time because single-family homes are getting too expensive.

How to Sell

Higher interest rates are making many people less likely to sell their homes because they want to keep them. They don’t want to give up their low-rate mortgages, which makes it hard to buy homes in some markets.

As an Investor

Even though rates are higher, real estate investors, especially those who buy with cash, are still buying homes in key places. There is still a lot of demand for rentals, especially in areas close to major job centers.

North, Central, and South Jersey forecast

Northern Jersey (Bergen, Essex, Hudson, Passaic)

North Jersey’s proximity to New York City, superb schools, and limited space for new construction make it a popular place to live. A seller’s market here.

• At a steady rate of 5% to 6% per year, home prices are going up.

• New York City cash buyers are still interested in high-end areas like Short Hills, Rumson, and Hoboken.

• People in the middle income range are finding it harder to buy homes because of high interest rates, but people in the luxury market aren’t really affected.

• Due to problems with financing, condos in crowded cities like Jersey City and Hoboken are moving more slowly.

Central Jersey (Middlesex, Monmouth, Somerset, and Mercer Counties)

Central Jersey has a more stable market, which makes it more appealing to families and workers.

• In places like Princeton, Colts Neck, and Plainsboro, price growth is modest, at about 3% to 4% per year.

• Stable demand is helped by good schools, good transit links, and a generally higher availability of housing.

• There aren’t many listings because many homeowners are hanging on to their low mortgage rates.

• This is a good area for first-time buyers because condos and houses that aren’t too expensive are selling faster.

South Jersey (Camden, Gloucester, Atlantic, and Cape May Counties)

South Jersey is becoming a good place to buy a home. It’s becoming easier to get into now that there is more land available and prices are rising more slowly.

• Most home price rises are small, between 1% and 2%.

• In popular places like Cherry Hill, things stay the same, but in places like Atlantic City, growth is flat.

• Some counties’ higher property taxes are keeping people from buying.

• People who are looking to buy their first home or invest cash are drawn to this area because it is affordable and has rental possibilities close to Philadelphia.

Predictions for the 2025–2026 Housing Market

Will Prices Go Down?

• North Jersey: Due to high demand and low supply, home prices are not expected to go down.

• Central Jersey: Growth will be moderate, but some places that are too expensive may see small price drops.

• South Jersey: In places where demand is low, prices may stay the same or go down a little.

Trends in Inventory

• Inventory is still low across the state, but there are starting to be more open listings in South Jersey.

• New construction is moving more slowly because of high building costs and a lack of workers.

How Buyers and Sellers Work

• North Jersey: It’s still a good time to buy a home, especially in the best areas.

• Central Jersey: A fair market that gives buyers and sellers a fair amount of power.

• South Jersey: It’s getting easier to buy things, so there’s more room for discussion.

Helpful Tips for Investors, Buyers, and Sellers

• Buyers:

  • Buy homes fast in North Jersey that are priced right. Single-family homes might be harder to get than condos and apartments.

  • For houses in Central Jersey that have been on the market for more than 30 days or are part of an estate sale, look for sellers who are ready to move.

  • You should take your time in South Jersey. It’s easier to get good deals because there is more inventory and less competition.

• Sellers:

  • If you price and stage your home carefully in North Jersey, you can get fast, competitive offers.

  • In Central Jersey, people will still be very interested in a well-kept house in a neighborhood that is good for families.

  • In South Jersey, where buyers have more choices and more power to negotiate, setting prices that are fair is very important.

• Investors:

  • North and Central Jersey still have good long-term rental yields.

  • South Jersey offers ways to make money, especially for people who invest in multifamily or short-term renting.

How to Get Around New Jersey’s Market in a High-Rate Era

The real estate market in New Jersey is still complicated and based on location. North Jersey is doing well because prices are steadily going up and demand is still high. Central Jersey is safe, and South Jersey is attracting budget-conscious consumers and investors.

In 2025, interest rates may be high, but you should know your market, financing options, and long-term ambitions. Buyers who are ready to buy may want to lock in a rate now and refinance later. If you want to sell your home, 2025 might be a good year to do it before things change again in 2026.

Ten Hoeve Realty Group can help you with personalized advice and professional help. We want to help you feel confident as you move through the market.

Sources:
Redfin Housing Market Reports – 2025
NJ Realtors Market Data
Federal Reserve Economic Projections
Zillow Research – NJ Housing Trends