Manhattan’s residential market continued to show resilience in the third quarter, despite a meaningful decline in new listings and overall inventory. New listings fell 28.4% year over year—the lowest level for a third quarter in nearly a decade—while total inventory declined 10.9%. Despite the lack of supply, closed sales still increased 2.7% from a year ago, underscoring that buyers remain willing to transact when they find the right property.
The strongest activity was concentrated in the $3 million to $10 million range, where sales posted particularly strong gains across both condos and co-ops. Luxury buyers also remained active, with 14 contracts above $20 million—up 75% from a year ago. At the same time, the majority of the market, specifically the sub $2M range, remains highly selective. Higher borrowing costs and economic uncertainty continue to influence decision-making, while dated or aggressively priced properties are taking longer to sell.
As we enter the fourth quarter, the market appears to be defined by limited supply, steady demand, and an increasing premium on quality and value. Sellers with well-priced, move-in-ready homes are in a strong position to capture attention, while buyers who are prepared to act continue to find opportunities in a market where compelling inventory remains scarce.
Mortgage Rates Move Sharply Higher: Last week mortgage rates saw their largest weekly increase in four years, with the average 30-year fixed rate rising from 7.03% to 7.28%, according to Freddie Mac. The move reflects continued pressure in the bond market and renewed concerns about inflation.
The increase comes at a challenging time for the housing market. Mortgage applications fell 6% for the week ending September 25, marking the fourth consecutive weekly decline. Rates had started the year below 6%, but have climbed steadily in recent months, reaching their highest level since 2023.
For the housing market, higher borrowing costs could keep some buyers on the sidelines while encouraging would-be sellers to reconsider listing.
Manhattan Luxury Market Shows Strong Rebound: Thirty contracts were signed last week in Manhattan at $4 million and above—13 more than the previous week and the first time since early June that the luxury market reached the 30-contract mark.
Condos continued to lead the market, outselling co-ops 21 to 7, with one condo and one townhouse also included in the mix.
Bottom line: Luxury activity is picking up as we move deeper into the fall selling season.
Pied-à-Terre Tax Faces Legal Setback: New York City’s new pied-à-terre, or non-primary residence surcharge, has hit an early legal roadblock. A state judge recently ruled that the City’s initial rollout was flawed, invalidating the notices sent to approximately 17,000 property owners and requiring the City to restart the process. Importantly, the ruling did not eliminate the tax itself.
What this means for owners:
The tax is still in effect; the ruling concerns the way the City implemented it.
Previous notices have been invalidated, so affected owners may receive new notices as the City restarts the process.
Future notices are expected to provide more information about the records the City relied upon in determining that a property may not be a primary residence.
The City is appealing, while separate lawsuits are challenging the constitutionality of the surcharge itself.
Owners who have received a notice should continue to monitor communications from the NYC Department of Finance rather than assuming the issue has gone away.
For Manhattan homeowners, the practical takeaway is don't panic, but don't ignore it. The legal challenges could significantly affect how the surcharge is implemented, but for now the underlying law remains in place.
As always, homeowners facing a potential surcharge should consult their tax or legal advisor regarding their individual circumstances.
Check out our video post here on why home values don’t always go up.
As always, please reach out with any questions.
