First Drop in Manhattan Home Prices Since Pandemic Heralds `Year of Disappointment'

Median prices and sales decline year on year in fourth quarter

Real estate agent showing condo for sale to young couple
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Manhattan home prices fell on an annual basis for the first time since the start of the pandemic as prices and sales "normalize," slowed by rising interest rates, according to Miller Samuel Inc. and brokerage Douglas Elliman Real Estate,

Median prices were still well above the fourth quarter of 2019, the last period before the pandemic took hold, sparking a frenzy of buying as shoppers sought space to quarantine. While the rate of annual sales growth was negative for a second quarter, and listing inventory was down from the previous quarter, it was still in line with the pre-pandemic pace, according to Jonathan Miller, president of Miller Samuel.

The new year isn't likely to bring a significant shift in direction, especially as new supply is limited by sellers' unrealistic expectations, Miller said. The trend roughly reflects what's happening across the country..

"Because 2021 was so distorted from reality, essentially all we are doing is normalizing, returning to historically consistent results,'' Miller said in an interview. "I’m calling 2023 the year of disappointment because sellers are disappointed they won’t be able to get what they got in 2021."

Key Takeaways

  • Median Manhattan home prices fell, the first year-on-year decline since the pandemic.
  • Manhattan home price remain well-above pre-pandemic levels.
  • New development sales declined sharply.
  • The market remains constrained by limited supply,

The only thing likely to bring more supply into the market falls into the category of "be careful what you wish for," said Miller. "What brings more supply into the market is a recession." Otherwise, the Federal Reserve will keep interest rates high, probably raising them by another 75 basis points early in the year, and then it's just "the market moving sideways until 2024."

The median Manhattan price of all condos and co-ops fell to $1.1 million, a 5.5% decline from a year earlier and 4.7 percent drop from the previous quarter. The number of sales fell 28.5% from a year earlier and 31% from the previous quarter, to 2,546.

The average price fell 0.4% from a year earlier, to $1.94 million, while the average price per square foot rose 5.3% to $1,662.

"The average and median both declined year over year, but the price per square foot is up because the average sale size has fallen," Miller said.

One-bedroom units made up the biggest share of sales in the quarter, at 37.5%, with median prices rising 7.4% from a year earlier.

The median sales price of new developments dropped to $1.98 million, sliding 10.9% from a year earlier and 14.4% from the third quarter.

Median sales prices for luxury units. defined by Elliman as the top 10% of the market, rose 4.2% from a year earlier, while overall sales of luxury units dropped 28.5%.

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