Manhattan home sales soar as buyers accept higher rates

by Jennifer Epstein

Manhattan home sales had a strong start to the year as a bigger share of buyers chose to bite the bullet and accept elevated mortgage rates.

The number of transactions completed in the first quarter jumped 29% from a year earlier to 2,560, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman. The median price of those deals rose 11% to $1.165 million. 

The increase in sales was driven in part by buyers taking advantage of small dips in mortgage rates over the past few months, rather than holding out for sharper declines, said Jonathan Miller, president of Miller Samuel. 

“The consumer, if they can afford it, is not waiting anymore for rates to fall,” he said. The average for 30-year, fixed loans ended the quarter at 6.65%, down from the recent peak of 7.04% hit in mid-January, data from Freddie Mac show.

In all, 42% of sales were financed, a larger share than in many recent quarters in the cash-heavy Manhattan market. Many of the buyers taking out mortgages were likely renters who got fed up with high prices and frenzied competition in the leasing market, Miller said. The median rent on new leases in February reached a record high of $4,500.

The year-over-year jump in sales may overstate the relative strength of the sales market, Miller cautioned. Early 2024 was an especially slow time as buyers waited for widely anticipated interest rate declines that never happened. The number of sales in the first quarter was only modestly higher than the decade average, suggesting the market is “normalizing,” he said.

Luxury deals — the top 10% of transactions — also showed strength. The median price in the category climbed almost 19% from a year earlier to $6.87 million. Prices were partly pushed up by the third straight quarter of declining luxury inventory, which fell 24%. 

Momentum appears to be continuing into the busier spring buying season, according to a separate report from Miller Samuel and Douglas Elliman. The number of contracts signed in March rose almost 13% from a year earlier for co-ops and 41% for condos. 

Copyright Bloomberg News