Manhattan’s housing market is starting to cool with sales stalling

The Manhattan skyline from Gantry Plaza State Park in the Long Island City neighborhood in the Queens borough of New York, US, on Wednesday, Aug. 17, 2022. New York’s apartment market has become super competitive as rent prices set records and vacancies stay low.

Ismail Ferdous/Bloomberg

The Manhattan housing market is calming down. 

Sales of co-ops and condos dropped 3.7% in the third quarter from the previous three months and more than 18% from a year earlier, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report Tuesday. The median price on transactions completed slipped 7.6% to $1.15 million from the second quarter.

“The market is resetting,” said Jonathan Miller, president of Miller Samuel. “It’s a soft landing or a settling.”

While prices are still higher than a year ago, Manhattan’s market is easing after more than a year of ballooning prices and frenzied activity fueled by soaring stock prices and low borrowing costs. The Federal Reserve’s plan to hike interest rates will continue to cool sales, Miller said.

The market’s pipeline also points to continued cooling. The number of Manhattan homes entering contract in September was down roughly 32% from a year earlier, the sixth consecutive month of year-over-year decreases. The high-end part of the market has been hit the hardest, with contracts for homes priced at $4 million or more falling nearly 50% in September from a year earlier.

Even though mortgage rates have doubled since the beginning of the year, the share of Manhattan sales conducted in cash fell to 49% in the third quarter from nearly 53% in the second quarter.

Despite all the signs of softening, the Manhattan market is still on stronger footing than it was before the pandemic hit. The median price was up 3.6% from the same time a year ago. The number of closings, while down from last year, was 14.3% higher than the third-quarter average of 3,231 over the previous decade.