Manhattan Residential Real Estate Shows Signs of Thawing

One of the country’s most expensive and frozen residential real estate markets is showing signs of a warmer-than-usual spring thaw. 

Signed contracts for home purchases in Manhattan jumped 34.7% in March from February, compared with the 9% increase typical this time of year, according to data on Tuesday from real estate brokerage firm Douglas Elliman. At the same time, new listings rose 49.3% versus the typical 10% increase that kicks off the spring buying season. Both are still well below data from March 2021 during the frenzied real estate market of that year, with signed contracts down 35%, and new listings down 19.4% year-over-year.

The ultra-expensive Manhattan market has been in the grip of a deadlock similar to the one that’s kept the national housing market in the doldrums, said Jonathan Miller, CEO of Miller Samuel, which prepared the report for Elliman. As mortgage rates ratcheted up over the course of 2022 and early 2023, many homeowners have grown reluctant to sell, partly because they’re reluctant to give up ultra-low mortgage rates they got during the pandemic, and partly because there’s nothing for them to buy if they move out.

For the relatively few homes on the market in Manhattan, sellers seem reluctant to lower their prices too much, Miller said, citing anecdotal reports.

“I call 2023 ‘the year of disappointment’ because sellers aren't going to get their 2021 price and buyers aren't going to get a substantial discount, so both sides are disappointed in the market at the moment,” Miller said.

That’s starting to turn around. Mortgage rates fell for the last three weeks of March, according to data from Freddie Mac, as the Federal Reserve signaled that its campaign of anti-inflation interest rate hikes is nearing an end. That’s given some owners the confidence to put their homes on the market, shaking up the Catch-22 that’s held down inventory and sales.

“Barring some other unknown, unforeseen economic event, there's probably going to be a normal seasonal uptick, if not a little bit more of an uptick in the spring,” Miller said. “The spring market, which is typically the Super Bowl of any annual housing market, is going to see an uptick in activity as usual. And that will lessen downward pressure on prices in some markets.” Miller said.

That would be a reversal of the latest quarterly trend. Average condo and co-op prices rose 0.5% to $1,950,333 in the first quarter of 2023, Elliman data showed, although they are down 4.5% year-over-year.