Manhattan’s residential market is picking up the pace.
More deals for the borough’s condos and co-ops crossed the finish line in the third quarter, from the borough’s year-ago total, according to Miller Samuel’s quarterly report for Douglas Elliman.
Sales closed at a greater clip than listings hit the market, marking the third consecutive quarter where transactions outpaced inventory.
“It’s not blazing, but the market is slowly getting faster,” said report author Jonathan Miller.
Buyers and sellers notched 3,100 deals in the third quarter, marking a 13 percent uptick from the same period last year. During the same time frame, the number of active listings rose 7 percent from roughly 7,200 to 7,700.
While elevated mortgage rates depressed sales across the country, transactions in Manhattan beat the decade norm. The number of sales was up about 1 percent from the long-term average of 3,030.
The borough’s median price also increased nearly 6 percent year-over-year to just under $1.2 million.
“We’re seeing falling months of supply and rising sales outpacing that, which is keeping pressure on housing prices,” Miller said. “Affordability is still being tested.”
Mortgage rates began dropping midway through the third quarter, though Miller said the impact of that decline isn’t yet evident in the data, given that prices remain high and most sales went to cash buyers.
Cash deals accounted for 65 percent of those transactions, with the number of all-cash deals rising 31 percent annually and the number of financed deals declining 9 percent.
“Higher-end consumers are better equipped to deal with elevated mortgage rates,” Miller said, though he cautioned that “higher-end” isn’t limited to the ultra-luxury sector. “I don’t want to over-subscribe to the idea that these are all super luxury or super wealthy buyers. They’re not.”
Many expect the Federal Reserve to announce two additional interest rate cuts this year, which could hold rates steady at their current lower levels or drive them down further.
An interest rate cut “doesn’t guarantee that mortgage rates will fall, but it certainly helps given how damaged the job market has been,” Miller said.
He added that a decline in mortgage rates could also ease pressure on the city’s rental market, which has logged record highs in five of the last eight months.
If lower mortgage rates continue, “we’ll see the rental market step back a little bit,” Miller said. “I’m not saying it’ll be a dramatic improvement in affordability, but a reset to more stability.”
The dip in mortgage rates will likely have a larger impact on results for the fourth quarter, Miller said, including an increase in deals at the lower end of the market compared to those at the higher end.
“There’s a tremendous amount of pent-up demand in the market,” Miller said, which could translate to a “robust Q4 if mortgage rates fall.”
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