A sign advertising a house for sale is displayed outside a building in Manhattan, New York City, on April 11, 2024.
Spencer Platt | Getty Images
Manhattan is becoming a buyer's market as apartment prices fell and supply rose in the second quarter of 2024, according to new reports.
The average sales price of real estate in Manhattan fell 3% to just over $2 million, according to a report from Douglas Elliman and Miller Samuel. The median price fell 2% to $1.2 million, and prices for luxury condos fell for the first time in more than a year, the report said.
The price drops are driven by a growing inventory of apartments for sale, which are also taking longer to sell. There are now more than 8,000 apartments for sale in Manhattan, higher than the 10-year average of about 7,000, said Jonathan Miller, CEO of Miller Samuel, the appraisal and research firm.
Manhattan now has a 9.8-month supply of apartments for sale, meaning it would take 9.8 months to sell all the apartments on the market without new listings, according to Brown Harris Stevens. “Any number above 6 months tells us there is too much supply and we are in a buyer's market,” the Brown Harris Stevens report said.
Manhattan’s falling prices and rising number of unsold apartments stand in contrast to the national real estate landscape, where persistently tight supply is keeping prices high. Brokers and real estate analysts say Manhattan’s high prices have become unsustainable post-COVID, and both buyers and sellers are ultimately surrendering to a higher-interest-rate environment.
The sun sets over the Midtown Manhattan skyline and the Empire State Building in New York City, seen from Jersey City, New Jersey, on April 23, 2023.
Gary Hershorn | Corbis News | Getty Images
“The resolve of buyers and sellers weakens,” Miller said. “At some point, they can't wait any longer before they feel like they have to make a move.”
As the gap between buyers’ and sellers’ expectations narrows, more deals are closing. There were 2,609 sales in the second quarter, up 12 percent from a year ago, according to the Douglas Elliman and Miller Samuel report. That marked the first sales increase in two years.
“As the second quarter began, New York's real estate market awoke from the doldrums “Deals began to open up across all price points,” said Frederick Warburg Peters, president emeritus of Coldwell Banker Warburg.
High rents in Manhattan also continue to drive sales. The average rent for an apartment was still above $5,100 per month in May, and rents typically rise in late summer. Many potential buyers who have been waiting for the rental market to open are finally deciding to buy, hoping that interest rates will drop in late 2024 or early 2025.
“If people weren't sure they were going to buy a home, maybe the high rents persuaded them to buy a home,” Miller said.
However, mortgage rates have less of an effect on real estate in Manhattan than in the rest of the country, since most sales in Manhattan are all-cash. In the second quarter, 62% of deals were all-cash.
While prices fell across all segments of the Manhattan real estate market, the upper end has been among the weakest as the wealthy wait to buy until after election uncertainty. Median sales prices in the luxury segment — or the top 10% of the market — fell 11% in the second quarter, Miller Samuel said. Luxury condo inventory rose 22%.
“With the high end, this weakness could be the start of a trend or just a one-time event,” Miller said. “We'll have to see what happens in the second half.”
