Manhattan is now a 'buyer's market' as real estate prices fall and inventory rises

Manhattan’s real estate market has transitioned into a buyer’s market during the second quarter of 2024, as indicated by falling apartment prices and an increase in inventory. The average real estate sales price in Manhattan dropped by 3% to over $2 million, and the median price decreased by 2% to $1.2 million. Luxury apartment prices experienced a decline for the first time in over a year.

The increased inventory of apartments for sale and longer selling times have contributed to the price decreases. Currently, there are over 8,000 apartments available for sale in Manhattan, which is higher than the 10-year average of approximately 7,000. The high inventory has resulted in a 9.8-month supply of apartments, indicating a buyer’s market as any number over 6 months indicates excessive supply.

In contrast, the national real estate market continues to experience tight supply, keeping prices high. The shift in Manhattan’s market is attributed to the post-Covid prices becoming unsustainable, as both buyers and sellers are now adjusting to a higher interest rate environment.

Despite the falling prices and rising unsold apartments, the market has seen a rebound in sales. There were 2,609 sales in the second quarter, marking a 12% increase from the previous year. The rebound is attributed to the narrowing gap between buyer and seller expectations, leading to more closed deals.

High rents in Manhattan are also helping sales, with the average apartment rental price in May still exceeding $5,100 a month. Many potential buyers who were waiting out the sales market in rentals are now deciding to buy, hoping for a decrease in interest rates at the end of 2024 or early 2025.

While prices have fallen across all segments of the Manhattan real estate market, the high-end segment has experienced the most weakness. The median sale prices in the luxury segment decreased by 11% in the second quarter, and listing inventory of luxury apartments surged by 22%. The weakness in the high-end market could either be the start of a trend or a one-time occurrence, depending on the second half of the year.

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