State of the Market Q3 2023
Q3 2023 continues to show positive signs of market stabilization.
- With the annual decline in sales moderating, lower marketing times reflecting its seasonal pattern, and expected adjustments in pricing, the Manhattan market continues to normalize.
- The possibility of an economic “soft landing,” pause in interest rate hikes, and lower inflation is combining with slightly lower prices, record-high rents, and natural demographic demand drivers to induce others back into a stabilizing market.
Closings were down 18% versus a strong Third Quarter 2022, but rose 10% over last quarter to 3,427 sales and $6.89 billion in volume— about 5% higher than their respective five-year averages.
- Although this quarter’s sales were below the strong third quarters of 2022 and 2021, 3Q 2023 still surpassed sales figures for the third quarters of 2018, 2019 and 2020.
- Contracts signed, the true indicator of demand, did slip 15% YOY, however, with 2,266 deals, this is the smallest annual drop in contracts since interest rates spiked six quarters ago.
- Sales in Upper Manhattan were down 32%, with all other submarkets seeing declines between 15% and 17%.
Third Quarter 2023 active listings fell year-over-year for the fifth time in eight quarters, down 3% about 6,500 units—the lowest third quarter since 2017.
- The 3% annual decline is due to the very low levels of new product entering the market, with studios and one-bedrooms seeing the biggest decline in availability.
- With would-be sellers hesitant to give up low mortgage rates, fewer than 3,800 apartments were listed this summer.
- This is the lowest figure of any third quarter since 2009, when the financial crisis finally ended.
Pricing in Manhattan is only just beginning to adjust to the slower sales market, lingering supply, and the highest mortgage rates in over 20 years.
- Median price rose annually for the first time in four quarters, up 2% because of the decline in sales over $1M, and the highest market share of new developments in recent years.
- Both median and average price declined quarter over quarter, down 2% and 5%.
- The YOY decline in average and median price per square foot, which were down 3% and 4% respectively, is the best indicator of a downward trend as it shows the more complete mixture of sales by price, location and size.
- This is the second consecutive quarter of a drop in prices per square foot.
- Price figures are similar to their 2015 levels, bringing real value into the market, something that we hope will help to stimulate demand in quarters to come.
Read the full report here.