New Jersey Housing Market Outlook 2024-2026: Rates, Trends, and Opportunities

December 13, 2024

Fannie Mae’s Forecast: What’s Ahead for Rates and Housing Sales Through 2026

Fannie Mae (the Federal National Mortgage Association or FNMA) has released its latest forecast for mortgage rates and housing sales, projecting trends through 2026. Let’s break down the key takeaways and explore what they mean for buyers and sellers in today’s market, with a focus on New Jersey-specific insights.


1. Mortgage Rates Will Stay High Longer

Mortgage rates are expected to remain elevated, averaging:

  • 6.6% in 2024

  • 6.3% in 2025

These rates are projected to stay above 6% through 2026. While this makes affordability more challenging for buyers, it also reduces competition in the market.

Solutions for Buyers:

  • Consider financing options like rate buydowns and seller credits for closing costs to ease affordability pressures.

  • Explore creative ways to structure your mortgage to fit your budget.

New Jersey Insight:

In New Jersey, where the median home price exceeds $450,000 in many regions (as of 2024), higher rates could significantly impact monthly payments. However, demand remains strong in commuter-friendly areas such as Bergen County and Middlesex County, where inventory remains tight.


2. Home Sales Are at Historic Lows

The housing market is experiencing some of the lowest transaction levels in decades:

  • 2025 Forecast: Home sales will remain near a 30-year low, with only a modest growth of 4% from 2024 levels.

  • 2026 Recovery: A significant rebound of over 17% is anticipated as affordability improves and pent-up demand drives activity.

Implications for Sellers:

  • Longer selling times may become the norm in areas with higher inventory.

  • Homes priced competitively and presented well can still sell quickly despite the slower market.

New Jersey Insight:

New Jersey markets such as Essex and Union Counties have seen fewer transactions due to rising interest rates, but the state’s proximity to major metropolitan areas like New York City continues to create demand. Suburban towns with strong school systems and public transit options are particularly desirable.


3. Home Prices Will Increase Slowly

Home price growth is expected to remain modest over the next few years:

  • 2024: +5.2%

  • 2025: +3.8%

  • 2026: +3.6%

This steady growth means buyers may not feel rushed to enter the market, and sellers should set realistic price expectations.

New Jersey Insight:

In New Jersey, home price growth is expected to remain steady, particularly in areas like Hudson County and Monmouth County, where demand for urban living and coastal properties continues to drive interest. However, areas with less commuter appeal may see slower growth.


4. Opportunities for Buyers

Buyers, particularly in areas with higher inventory, may find opportunities to negotiate better deals. Here’s how to position yourself:

  • Research Local Markets: Focus on neighborhoods with higher inventory and lower competition.

  • Make Strategic Offers: In high-inventory areas, consider making offers below the asking price.

  • Explore Financing Options: FHA, VA loans, or rate buydowns can help secure an affordable monthly payment.

New Jersey Insight:

New Jersey’s real estate market offers a variety of opportunities for buyers. In areas like Camden and Gloucester Counties, where inventory is relatively high, buyers can negotiate favorable terms. Meanwhile, desirable locations like Hoboken may still see competitive bidding despite higher rates.


5. Opportunities for Sellers

While the market is slower, motivated buyers are still out there. Sellers can maximize their chances of success by:

  • Pricing Competitively: Attract serious buyers by setting a realistic and appealing price.

  • Enhancing Presentation: Ensure your home is well-marketed and prepared for showings.

New Jersey Insight:

Sellers in high-demand areas such as Bergen County should focus on showcasing commuter convenience and local amenities. Meanwhile, those in suburban or rural areas can emphasize outdoor space and family-friendly neighborhoods to attract buyers.

Practical Advice for Buyers and Sellers

For Buyers:

  • Be Patient: Take your time to find a good deal, especially in high-inventory markets.

  • Stay Ready: Be prepared to act quickly if you spot a property that meets your criteria.

For Sellers:

  • Partner with an Expert: Work with an agent who understands the nuances of your local market.

  • Prepare Your Home: Invest in presentation and staging to make your property stand out.

As the housing market evolves, understanding these trends can help you make informed decisions. Whether you’re buying your first home, upgrading, or selling, staying ahead of the curve is key to success. Visit Ubiquity Real Estate Group to learn how our expert agents can help you navigate this dynamic market.

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