Last quarter, savvy buyers entered the real estate market anticipating that falling interest rates would lead to rising prices and more buyer competition. As a result the market experienced a surge in buyer activity. September marked the fifth consecutive month of declining rates, driving a 6.5% increase in Manhattan’s residential real estate sales volume compared to the same time last year. Signed contracts in September exceeded the monthly average for the first time since May 2023 showing signs that the market is emerging from its 2.5-year slump.
Meanwhile, cash sales dropped to 55%, the lowest level in two years, as more buyers opted to finance their purchase. Despite 3% decline in median prices, there were notable gains across all price points for condos and new developments. Entry-level apartments priced below $1 million saw strong demand, with interest rate-sensitive buyers moving quickly to take advantage of lower mortgage rates ahead of the anticipated September Federal Reserve rate cut.
There are several reasons for optimism. The Federal Reserve recently cut interest rates for the first time since 2020, and 30-year fixed rate mortgages dropped to nearly 6%, down from 8% last year. A surging stock market, lower inflation, pent-up buyer demand and record-high rents are all contributing to a market that appears poised for a turnaround.
While the outlook is positive, uncertainties remain. The upcoming election and ongoing geopolitical unrest may impact the economy and temper the market’s momentum. However, it’s rare for the Manhattan to stay in a prolonged slump. As such it’s likely the market will continue its upward trend, especially after the new year.
