Luxury high-rise apartments are viewed in Central Park South near Columbus Circle in New York’s Manhattan borough.
Robert Nickelsberg | Getty Images
Manhattan apartment sales fell 18% in the third quarter as rising mortgage rates and falling stock markets slowed the New York real estate comeback.
The decline is the first since 2020 and marks a reversal for the country’s largest real estate market, according to a report by Miller Samuel and Douglas Elliman. While prices in the Big Apple remain high — with the average price of Manhattan apartments rising 4% over the past year to $1.96 million — price increases are slowing and the stock of unsold homes is beginning to rise.
Manhattan sales last fell in the fourth quarter of 2020, when they fell 21%.
“The Manhattan boom has been interrupted,” said Jonathan Miller, CEO of Miller Samuel, a rating and research firm.
Brokers say the drop simply marks a return to normalcy after the artificially high sales of 2021. They say buyers and sellers are still active, and sellers are responding to higher mortgage rates with lower listing prices. The average discount — or selling price from original list price — rose to 7% in the third quarter, from 5.6% last year, Miller Samuel said.
“The real sellers meet the buyers,” says Toni Haber of Compass.
Haber said she represents a potential buyer looking for a penthouse that initially cost $14 million, which amounted to $12 million. She recommended making an offer of $9 million or $10 million “and if they take it, they take it.”
However, many brokers say sales are likely to fall further as the stock market plummets and rising mortgage rates continue to take their toll.
“The full impact on sales and prices won’t be known for at least a quarter,” said a Brown Harris Stevens report. Brown Harris said half of the closings in the third quarter were signed before mid-May and do not reflect the full impact of rising interest rates.
According to Miller Samuel and Douglas Elliman, September sales contracts were down 29% from a year ago. Since signed contracts are an indicator for future quarters, fourth quarter sales are also likely to decline.
The top end of the market shows the largest declines. A Coldwell Banker Warburg report found that both median discounts and median days on the market rose for apartments priced at $10 million or more. Co-ops in the “beautiful grand antebellum apartments along Park and Fifth Avenues and Central Park West, which were ambitious homes for so many New Yorkers, are now hanging around for months, even years, without buyers,” the report said.
Contracts signed in September for luxury condos — those priced at $4 million or more — were down 50%, according to Miller Samuel.
“There’s more weakness the higher you skew in price,” Miller said.
Miller said the top end of the real estate market is more “discretionary” because wealthy buyers and sellers typically have more freedom to decide when to buy or sell. Many sellers wait to quote until the market improves. Wealthy buyers, meanwhile, watch the stock drop more than 20% and wait for similar price drops in the real estate market.
“Between the volatility in the financial markets and rising interest rates, we see the upper end of the line disappointing,” he said.
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