Manhattan's residential sales market continued to demonstrate resilience in the third quarter despite economic uncertainty, rising interest rates, tight inventory and a sharp decline in new listings
Sale Prices Hit Record Highs
Pricing remained incredibly strong throughout the third quarter. The median sales price equaled a record high of $1.25M, representing an increase of almost 6% year over year. Price growth was particularly strong in the two to three bedroom market segment, which saw a healthy annual sales growth, and in the $2M-5M price range.
Strong Sales Volume
Transaction activity defied broader economic pressures. Overall sales volume hit its highest level since Q3 2022, the period which marked the beginning of the sharp spike in interest rates. Higher price segments showed particularly notable gains and was a major driver of sales volume:
· Apartment sales in the $3-5M price range surged by more than 30%
· Condominium sales in the $5-10M price range experienced double digit sales growth
Inventory Constraints and The Renovation Premium
Inventory remains one of the defining characteristics of the Manhattan market. Active listing inventory is at its lowest level in four years, while new listings during the third quarter fell by more than 28% compared to a year ago.
Limited supply has helped keep prices stable and, in some market segments, pushed prices higher. Buyers continue to gravitate toward well-priced properties that are move-in ready, while properties requiring significant renovation are taking longer to sell.
Renovated properties are commanding a premium, although that premium can diminish over time. A renovation typically retains much of its value for approximately three years before buyers begin discounting the price. After roughly 12-15 years, buyers may begin factoring in the potential for a full renovation, even when a property remains well maintained and in excellent condition.
Looking Ahead
Signed contracts provide an early indicator of where sales are headed since transactions typically take around three months to close.
While we saw a promising bump of over 3% in signed contracts during September, the overall number of signed contracts remains down compared to a year ago. This suggests the fourth quarter may be more mixed than the strong closed sales numbers seen during the second and third quarters.
As of the end of September inventory remained tight, down almost 10% year-over-year and below the five year range, even as available inventory approached the typical peak of the fall inventory cycle.
In Conclusion
Overall, Manhattan enters the fourth quarter with a market characterized by limited supply, resilient pricing and continued demand for well-priced and renovated properties. Activity remains strong above $2M with opportunities for buyers below $2M.
