Manhattan Home Sales Unexpectedly Rise as Buyers Cave on Rate Cuts

Jennifer Epstein

Mon, Jul 1, 2024, 9:01 PM2 min read

(Bloomberg) -- Manhattan home sales rose for the first time in two years as impatient buyers who had been waiting for interest rates to fall took the plunge.

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Closings of co-ops and condos spiked 12.2% in the borough in the three months through June from the same period in 2023, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. While the median price of $1.18 million in the quarter dipped slightly from a year earlier, it was still hovering near a record since rates soared in mid-2022.

“Buyers aren’t willing to wait anymore even though rates haven’t cooperated,” said Jonathan Miller, president of Miller Samuel, who called the increase in sales “unexpected.” Some may have been driven by family or other personal needs, he said, while others could have begun planning for a purchase last year — when many experts predicted the Federal Reserve would have cut interest rates by now — and stuck with their plans even as rates hovered around 7%.

The US real estate market has been largely frozen for more than a year, with the highest mortgage rates in decades causing a lack of new inventory that has kept values elevated. The Manhattan data suggests buyers may be viewing this period as a good time to make a move — before any Fed cuts increase demand and potentially boost prices.

In a sign of buyers’ acceptance of higher interest rates, sales with mortgages rose from a year ago by a larger percentage, 15.1%, than those conducted in cash, which increased 10.6%.

Meanwhile, about 27% of the deals in the second quarter came after at least one price drop, down from roughly 35% in the previous four quarters.

“Listings entering the market are more in sync with current conditions,” Miller said.

Until rate cuts, though, the busier Manhattan market may be short-lived. The 698 contracts signed in June were a nearly 14% decline from the same month last year and 10% fewer homes were listed.