After several years of sideways movement, the Manhattan residential sales market returned to growth in 2025. The year began with a strong surge in activity and maintained momentum through the second half. The fourth quarter was particularly robust, with continued increases in both median price and sales volume on a quarter-over-quarter and year-over-year basis.
Compared to a year ago, fourth quarter median price rose nearly 2.5 percent while sales volume increased approximately 5.5%. At the same time, supply fell to its lowest level in eight years. While overall growth was modest, the primary engine of growth was the high-end segment of the market, which experienced explosive activity. Luxury sales in 2025 increased more than 16% compared to 2024.
Co-ops Outperform Condos
In the fourth quarter, the co-op market outperformed the condo market. Co-op median price increased nearly 4 percent year-over-year, while condo median price declined by less than 1 percent. Co-op sales volume jumped 7 percent, more than twice the pace of condo sales. With median rents reaching record highs, the rent-versus-buy equation shifted for some renters, leading many buyers to view co-ops as a better value than condos and helping to drive increased co-op activity.
All Cash Purchases Continue to Dominate
All cash buyers, who are less sensitive to interest rates, accounted for nearly 65% of closed sales last quarter. These transactions were mostly above the $2 million price point, helping to sustain both sales and price levels in the mid- to high-end of the market.
Declining Interest Rates
Mortgage rates began easing during the summer months, providing some relief to the entry-level segment of the market, which has struggled following the sharp rise in rates that began in 2023.
2025 Growth Factors Influencing the 2026 Market
There is cause for optimism in the 2026 market as several forces that fueled the market in 2025 are expected to continue influencing the market in 2026:
- Wall Street bonuses: Bonuses earned in 2024 and paid in early 2025 reached record levels. Bonus pools are expected to be among the highest in several years and may even surpass last year's record, supporting continued demand in higher priced segments.
- Mortgage rates: Mortgage rates have been easing since the summer, with rates now below 6 percent. Further gradual declines are anticipated this year, improving affordability and buyer confidence. This should help bolster the entry level segment.
- Limited inventory: Tight supply towards the end of last year constrained buyer choice. Many homeowners remain locked into historically low mortgage rates and are reluctant to sell, forcing buyers to choose from a smaller pool of available homes. This dynamic continues to limit overall sales volume.
- Return to office mandates: Return to office mandates are increasing and drawing professionals back to the city after pandemic era relocations. Many are purchasing full-time residences or pied-a-terres, adding to demand
- Rental to ownership migration: December saw another record high in rents and are beginning to push renters toward homeownership as a more stable long term alternative.
- Foreign buyer activity: Foreign buyers were more active in 2025 as a weaker dollar made Manhattan real estate comparatively more affordable, particularly in luxury condos and new developments. Some international investors also view Manhattan property as a hedge against economic volatility in their home countries.
The conditions that drove growth in 2025 are likely to continue influencing pricing, sales volume and overall market behavior in 2026. While the market is improving, sellers are best served by pricing in line with current market conditions, as overpricing often leads to extended time on market and ultimately lower sale prices.
