'Signs of a comeback': Sales pick up for Manhattan co-ops and condos
- Manhattan co-op and condo deals climbed 6.7 percent in the third quarter according to the Elliman Report
- Falling mortgage rates prompted savvy buyers to get a jump on the competition before prices rise
Additional interest rate cuts this year and in 2025 are "going to do one thing: increase sales,” said Jonathan Miller of Miller Samuel.
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A burst of sales activity for Manhattan co-ops and condos during the third quarter could be a sign of more momentum to come during the fall and winter months.
Manhattan sales jumped 6.7 percent in the third quarter compared to the second quarter, although they were down 2.5 percent from a year ago, according to the latest edition of the Elliman Report for Manhattan co-ops and condos. New signed contracts were up 18.5 percent for the month of September, according to a different, newly released Elliman Report.
The sales and contract signing upticks were spurred by lower mortgage rates: 30-year mortgage rates averaged about 5.74 percent in September, a drop of 31 basis points from the previous month, reported Business Insider. Last month was the fifth, consecutive month to see mortgage rates fall.
Lower mortgage rates, plus expectations that the Fed would cut interest rates (which it did), prompted savvy buyers to get a jump on the competition in the third quarter. They anticipated falling rates will lead to more sales activity, which will send prices higher.
Still, the 50-basis point rate cut by the Fed in mid-September was too late to have a material impact on quarterly sales, according to Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the reports.
Sales have been lower than long-term norms for two and half years since the Fed began raising interest rates in 2022, Miller said. They are about 10 percent below the decade average, he said.
There are expectations for additional interest rate cuts this year and next. J.P. Morgan, for example, predicts six cuts: Two more this year and four in 2025.
“That’s going to do one thing: increase sales,” Miller said. “I’m not saying it will be frenzied, but we will likely return to more normal sales levels.”
Manhattan median sales price slips
The median sales price for Manhattan co-ops and condos slipped year over year for the third time, dropping 3 percent to $1,115,000, despite the highest market share of bidding wars in seven years, about 9.7 percent of total transactions, Miller said.
Co-op median sales price fell year over year for the first time in five quarters, dropping 4 percent to $840,000, according to the Elliman Report.
Luxury deals heat up
Compass released its third quarter sales market report for Manhattan and found that the luxury market—properties in the $10 to $20 million and $20 million-plus price ranges—had the most growth in contract activity,
“Despite some of the mainstream media continuing to portray New York as a troubled city, I continue to see ultra-high-net-worth clients choose to buy and invest in New York,” said Tony Sargent, a broker at Compass.
A faster market
"The Manhattan market is finally showing signs of a comeback," said Pamela Liebman, president and CEO at Corcoran. She wrote in her firm's Manhattan market report for the third quarter that deals are happening faster and new listings coming into the market can’t keep up with contract signings.
“With demand outpacing new listings, we’re keeping a close eye on the fall season. If the Fed continues to cut rates—bringing more supply back into the market—prices will continue to rise,” Liebman said.
The increased pace of closings lowered apartment inventory to what is considered a balanced market, said Bess Freedman, CEO of Brown Harris Stevens, which also released a Manhattan market report.
The level of listings “indicates we are moving closer to a seller’s market in Manhattan,” Freedman said.
New development dilemma
According to SERHANT’S Manhattan new development market report for the third quarter, sales were down by double digits for Manhattan’s new development, even though the median sales price increased by 3 percent to $2,242,755
This was a result of buyers waiting for more favorable mortgage rates, “compounded by limited inventory and broader economic and political uncertainty,” wrote Coury Napier, director of research at SERHANT.
Where do we go from here?
Frederick Warburg Peters, president emeritus of Coldwell Banker Warburg, writes in his firm’s Manhattan market report that the prior quarter “disappointed some expectations by not coming in with a bang of inventory.”
Sellers unable to downsize are having a “dampening effect on inventory,” Warburg Peters said. Buyers who got a good deal on large units are not making a move because don’t want to pay high mortgage rates and hefty capital gains taxes, he said.
Still, with the election looming, it’s difficult to say what happens next, but “it seems likely that 2025 will be a stronger year than the past three have been.”
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