This summer, Manhattan’s real estate market has hit a bit of a snag. According to UrbanDigs, a real estate analytics firm, we’re seeing a “self-reinforcing cycle of low sales volume” that’s causing the market to stagnate.
While spring kicked off strong—showing an uptick in contract volume compared to the previous year—interest waned after May. Simply put, buyer enthusiasm fizzled out, leading to slower sales.
Right now, buyers are holding out for more inventory, hoping they can leverage prices lower. Meanwhile, sellers are waiting for a spike in market demand to strengthen their negotiating positions. This cautious stance from both sides has resulted in a stagnant market with no clear direction.
Currently, the median asking price for a home in Manhattan hovers around $1.41 million, marking a 6.4% increase from last year, according to UrbanDigs.
High prices, combined with steep mortgage rates—up to 6.78% for a 30-year fixed mortgage as of July 25—are likely discouraging buyers. Yet, as Walkup notes, it’s not just the numbers that are causing reluctance; “buyers are simply not excited about the market.”
Sellers are feeling the pinch, too. Many are hesitant to enter the market, thanks to the “lock-in” effect, where those holding onto sub-4% mortgages are wary of selling and losing their favorable rates. As Walkup explains, this results in less supply and, consequently, less demand.
Additionally, upcoming uncertainties related to the November presidential election contribute to the cautious sentiment, leaving many wondering, “What will New York City look like in the near future?” This doubt spans urban policies, economic recovery, and infrastructure changes.
However, there’s a glimmer of hope: this cycle could shift with decreased mortgage rates. Walkup suggests that the fall market might be busier than anticipated. “Lower rates could break the lock-in effect, encouraging more sellers—who are also buyers—to jump in,” he says. This increase in activity could potentially turn this current lull into a surge of market movement.