Luxurious high-rise apartments are visible in Central Park South, near Columbus Circle in New York City’s Manhattan borough.
Robert Nickelsberg | Getty Images
Manhattan apartment sales tumbled 18% in the third quarter as rising mortgage rates and falling stock markets slowed down the recovery in the New York real estate market.
According to a report by Samuel Miller and Douglas Elliman, the drop is the first since 2020 and marks a turnaround in the nation’s largest real estate market. While prices in the Big Apple remain high – the average price of apartments in Manhattan rose by 4% over the past year to $1.96 million – price growth is slowing down, and the number of unsold homes is starting to rise.
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Sales in Manhattan were last down in the fourth quarter of 2020, when they fell 21%.
“The boom in Manhattan has been cut short,” said Jonathan Miller, CEO of Miller Samuel, an appraisal and research firm.
Brokers say the drop simply marks a return to normalcy after artificially high sales in 2021. They say buyers and sellers are still active, with sellers responding to higher mortgage rates with lower listing prices. According to Miller Samuel, the average discount – or selling price over the original list price – rose to 7% in the third quarter, up from 5.6% last year.
“Real salespeople meet buyers,” said Tony Haber of Compass.
Haber said she represents a potential buyer who was eyeing the penthouse, which was initially valued at $14 million and then dropped to $12 million. She recommended an offer of $9 million or $10 million “and if they accept it, they will accept it.”
Many brokers, however, say sales are likely to fall further as the stock market plunges and rising mortgage rates continue to take their toll.
“The full impact on sales and prices will not be known for at least a quarter,” Brown Harris Stevens said in a report. Brown Harris said that half of the third-quarter closes were signed before mid-May and do not reflect the full impact of the rate hike.
According to Miller Samuel and Douglas Elliman, the number of signed sales contracts in September decreased by 29% compared to last year. Since signed contracts are an indicator of future quarters, fourth quarter sales are also likely to fall.
The top of the market shows the biggest decline. A report by Coldwell Banker Warburg showed that both median discounts and median days on the market increased for apartments valued at $10 million or more. According to the report, co-ops in “beautiful large pre-war apartments along Park and Fifth Avenues and Central Park West, which were coveted homes for so many New Yorkers, are now without buyers for months, even years.”
Luxury apartment deals worth $4 million or more, signed in September, have fallen 50%, according to Miller Samuel.
“As you go up in price, there is more weakness,” Miller said.
Miller said the high-end real estate market is more “discretionary” as wealthy buyers and sellers typically have more freedom to decide when to buy or sell. Many sellers are postponing listings until the market improves. Meanwhile, wealthy buyers are watching stocks drop more than 20% and are waiting for a similar drop in property prices.
“Due to the volatility in the financial markets and rising rates, we see that the higher level is disappointing,” he said.