Kerry made the remarks before flying to Amman from Jerusalem, after three days of intense shuttle diplomacy between Israel's Prime Minister Benjamin Netanyahu and Palestinian president Mahmud Abbas.
The US chief diplomat, on his 10th visit to the region since taking office less than a year ago, kicked-started nine months of direct negotiations in July after a three-year hiatus.
He has since stepped up his efforts to bring about a peace deal as an agreed late-April deadline looms and the two sides refuse to budge on their mostly irreconcilable demands.
Kerry urged Israeli and Palestinian leaders to make "tough choices" to bring about a lasting peace after decades of conflict, saying there was still "tension".
"We're at the table today because of the determination to try to resolve this issue, and both of them (Netanyahu and Abbas) have made tough choices to stay at that table. We are now at a point where the choices narrow down, and the choices are obviously real and difficult.
Kerry has pledged to work even more intensively in the coming months, seeking first to agree a framework to guide the talks.
A peace treaty would deal with all the core issues dividing the two sides, including the contours of a future Palestinian state, refugees, the fate of Jerusalem claimed by both as a capital, security and mutual recognition.
Kerry insisted yesterday there had been "progress" in the talks, despite bitter recriminations by both sides and mostly irreconcilable demands for any future peace deal.
"I'm confident that the talks we've had in the past two days have already fleshed out and even resolved certain kinds of issues and presented new opportunities for others," said the US secretary of state.
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