The Manhattan market continued its strongest performance in three years during the second quarter, even amid disruptions tied to U.S. tariff policies imposed in April. It is believed that nearly half of all Q2 sales went into contract before tariffs took effect, helping overall results.
Sales Volume Increases, Cash is King
Sales volume rose more than 16% year-over-year, reaching its highest level since Q3 2022. The median sales price climbed to $1.2M, the highest seen in three years. Buyers also had more options, as inventory levels loosened to their highest point since the start of the fall of 2020.
Cash purchases surged to almost 70% of total market activity, with most in the higher priced segments of the market. Interestingly, even in the sub-$1M market, more than half of purchases were made in cash, far above historical norms.
Increased Market Activity Led by $2M+ Buyers
Q2 market activity spiked with 3128 contracts were signed last quarter, the most since 2022. April accounted for the highest number of signed contracts. However, the introductions of U.S. tariffs and subsequent stock market turbulence likely dampened activity through the remainder of the quarter as uncertainty caused many buyers to pause their home buying search. What began as a promising start to the 2025 busy season ultimately lost momentum.
The market was largely driven by sales above $2M with the luxury market ($4M+ sales price) showing particular strength. 17 out of the past 18 months the luxury market outperformed the overall market. On the flip side the entry level segment (below $1M) continues to underperform, weighed down by high interest rates that began their sharp rise in March 2022. Signed contracts in this segment averaged 1,248 in Q2 over the past three years - 24% lower than in 2022.
Interest Rates Continue to Impact Market Providing Opportunities to Entry-Level Buyers
As mortgage rates remain stubbornly high, the entry level market is expected to stay soft, with rate-sensitive buyers continuing to rent rather than buy. While this represents a challenge for sellers, it could offer opportunities for well-positioned buyers who have leverage in this segment of the market. In fact, when interest rates dipped briefly in the 4th quarter of last year, signed contracts under $1M jumped 15.5% compared to the same period in 2023 and 2022. That's a strong indicator of pent-up demand just waiting for the right moment.
