Manhattan home sales fell for the first time since 2020

The two-year-long housing boom in Manhattan has ended. The rising mortgage rates, high inflation, and upcoming recession increased the uncertainty among people looking to buy a home. 

The sales activity in Manhattan slipped for the first time since 2020. In the third quarter of this year, sales of co-ops and condos fell 18.4 percent from last year and 3.7 percent from the previous quarter, according to the new report prepared by Miller Samuel. 

“While Manhattan sales declined year over year from the 2021 sales surge, the number of sales remained significantly higher than pre-pandemic,” said Jonathan Miller, the author of the report. 

The Manhattan housing market experienced a huge growth for most of 2021 when mortgage rates fell to their historic lows. Now, as the borrowing costs continue to increase, the once red-hot sales market begins to return to normalcy. 

The median sales price of Manhattan homes dropped 7.6 percent from the second quarter of this year to about $1.15 million. The average discount or the difference between the original asking price and the final sales price climbed to 7 percent in the third quarter, up from 5.6 percent last year, according to the report. 

The decline in the number of sales and home prices shows that the Manhattan housing market might soon become a buyers’ market. However, this change requires a much faster increase in listing inventory. In Quarter 3 of 2022, the number of apartments listed for sale in Manhattan rose 0.6 percent from last year to 7,741 available units. 

The market share of bidding wars in Manhattan dropped from 8.3 percent in September 2021 to 7.6 percent due to the rapidly rising mortgage rates. Although the interest rates climbed to 6.7 percent last week, they remain below inflation. As the competition among homebuyers declines, sellers are more willing to respond to high mortgage rates and lower the asking price. 

Resources:

“Elliman Report: Manhattan Sales 3Q 2022,” (Miller Samuel Inc., 2022)

“'Sellers just as uncertain as buyers' as the Manhattan sales market pivots to a slower pace,” by Emily Myers (Brick Underground, 2022)

“Manhattan apartment sales declined 18% in third quarter, as rates rose and markets fell,” by Robert Frank (CNBC, 2022)

“Manhattan’s Housing Market Is Starting to Cool With Sales Stalling,” by Jennifer Epstein (Bloomberg, 2022)

“Manhattan Home Sales Sink in the Third Quarter, But Remain Above Pre-Pandemic Levels,” by V.L. Hendrickson (Mansion Global, 2022)