New Jersey Real Estate Market: Trends, Prices, and Predictions

Disclaimer: PropStream does not offer investing advice and/or profit promises. This article is for educational purposes only. We recommend doing your due diligence and/or consulting financial professionals before investing in New Jersey real estate.

Did you know New Jersey (NJ) is the most densely populated U.S. state (not including the District of Columbia)? It has 1,263.2 residents per square mile and a total population of 9,290,841.

Consequently, the Garden State enjoys stable housing demand, making it a great place to work as a real estate investor or agent. Read on to learn more about NJ’s current market trends, real estate forecasts, and more.

Current New Jersey Housing Market Trends

Home Sales Edge Up

In August, existing home sales in NJ increased for the first time in five months, hitting 5,885, up 6.3% from the same month last year.

Meanwhile, the average number of days a property sat on the market (before an offer was accepted) was 31, much lower than the U.S. median of 55.

Inventory Still Down

Part of this can be attributed to New Jersey’s low inventory. The number of single-family homes for sale in August was only 14,896, a 3.6% decrease from last year and a 25.8% decrease from 2022. Furthermore, new listings hit 6,494, down 2.3% from last year.

Months of supply (the time it would take to sell off inventory at the current sales rate) reached 3.2, a 3.2% increase from August 2023 but still well below the U.S. average of 7.8. Historically, a six-month supply has been considered a balanced market, with anything less indicating a seller’s market and anything more a buyer’s market.

Thus, NJ favors sellers, even while much of the country has shifted to favoring buyers.

Housing Demand Stays Strong

Despite low housing inventory, NJ housing demand remains high. In August, single-family home listings received 103.8% over list price, suggesting the market is as hot as ever.

In March, 32 NJ towns ranked among the hottest real estate markets nationwide, with Fairfield, Ridgewood, and Ramsey ranking in the top 20 (out of 10,777).

Home Prices High and Growing

Naturally, NJ home prices remain high and growing.

After hitting an all-time high of nearly $600,000 in July, the median single-family home sales price reached $591,489 in August, up 5.6% from last year. That’s compared to a U.S. median home sales price of $422,100, a 2.9% increase from last year.

In other words, median NJ home prices are not only higher than the national average but growing at a faster rate.

New Jersey Real Estate Forecast

Now that you know the state of New Jersey’s housing market, where is it headed?

Mortgage Rates High But Expected to Fall Through 2025

A key factor will be mortgage rates.

As of October 10 (2024), the average U.S. 30-year fixed mortgage rate is 6.32%. That’s significantly down from its peak of nearly 8% last October but still high enough to keep many prospective homebuyers on the sidelines.

Now that the Federal Reserve cut its key interest rate in September for the first time since March 2020 and is expected to continue cutting it through 2025, many hope that mortgage rates will follow, increasing the amount homebuyers can borrow.

While it’s impossible to predict the future, Fannie Mae’s latest forecast suggests that 30-year mortgage rates will end the year around 6.2%, drop into the 5% range in 2025, and potentially hit 5.7% by the end of 2025. If so, expect more buyers to flood the NJ housing market, putting further upward pressure on home prices.

Housing Shortage for Foreseeable Future But Some Relief in Sight

As with most of the U.S., one reason for New Jersey’s housing shortage is the “lock-in effect.” This phenomenon occurs when current homeowners are reluctant to sell because doing so would require giving up their record-low pandemic-era mortgage rates, thus suppressing the existing home supply beyond what it would otherwise be.

However, if and when mortgage rates fall, it might motivate some homeowners to list their houses, adding to the current supply. Furthermore, building permits for 1-unit residential structures in NJ ticked up in July to 1,430, matching the level from July 2022 and marking the highest point since November 2019.

Still, the housing shortage is unlikely to go away anytime soon. According to the Regional Plan Association, New Jersey is short about 224,000 homes, and resolving this could take several years.

Home Values Likely to Stay High (And Grow)

Overall, housing demand may continue to outpace supply.

After all, millennials are now the largest homebuying generation, accounting for 38% of homebuyers in 2023. Still, only 52% are homeowners, compared to 70% of Gen X and 78% of Baby Boomers. As a result, you can expect millennial homebuyer demand to keep home values elevated despite a potential slight increase in supply.

Related: An Agent's Guide to Marketing to Millennials

6 Reasons to Work in the New Jersey Real Estate Market

Historically, New Jersey has had a stable real estate market that attracts investors and agents alike. Consider the following benefits of working here:

1. Population density. While New Jersey is the fifth-smallest U.S. state by land area, it ranks 11th for population. Consequently, it’s one of the most urban states in the country, with 93.8% of the population living in cities.
2. Strong economy. In 2023, New Jersey’s total gross domestic product (GDP) reached over $806 billion. Meanwhile, the seasonally adjusted number of nonfarm jobs in August reached 4.37 million, a 1.1% year-over-year increase. Major industries include financial services, transportation and logistics, and life sciences.
3. Transportation hub. New Jersey’s proximity to major cities like New York City and Philadelphia makes it a central location for commuters. The state’s infrastructure includes major interstate highways, seaports, and airports. For example, Newark Liberty International Airport is one of the busiest airports in the country.
4. Quality education. NJ is home to several well-known institutions of higher learning, including Princeton University, Rutgers University, and Stevens Institute of Technology. Additionally, the state’s public education system is ranked one of the best in the nation.
5. Luxury real estate. If you specialize in high-end properties, NJ can be a great market. It has the highest household income nationwide and the highest percentage of millionaires, who make up nearly 10% of the state’s population. Some of its wealthiest cities include Short Hills, Skillman, and Princeton Junction.
6. Attractions. New Jersey has a diverse range of attractions, both natural and historical. For example, the 130-mile-long Jersey Shore and the Delaware Water Gap National Recreation Area attract nature lovers, while Ellis Island and the Statue of Liberty (accessible from Liberty State Park) appeal to history buffs.