Manhattan was among the many markets impacted by a slowdown in the US housing market over the summer. Overall, the number of Manhattan homes in contract plunged a whopping 39% year-over-year. One thing to keep in mind when comparing 2022 to 2021 numbers, is that 2021 was an unusually robust year. The trend coincided with a spike in mortgage rates over the last several months, with the current average 30-year fixed-rate mortgage hovering near 6%. Mortgage rates are double what they were one year ago. The surging rates, which followed the Federal Reserve’s series of sharp interest rate hikes to tame inflation, have further hampered affordability for prospective homebuyers.
Having said this, Manhattan home prices have yet to see much of an impact from the slowdown in sales. The median price of a Manhattan home in contract actually jumped 1% to $1,159,000 year-over-year. While the rest of the country is seeing 10-20%+ pull backs from peak pricing Manhattan remained stable. The city saw less of a price pop last year, which should also lead to a smaller pull back.
In general, August is typically a slow month right before the post Labor Day pick up. We expect to see a mixed Fall sales market that is very dependent on location, size and quality of product.
For the full Compass August market report click here.
Some items to consider as 2022 carries on:
New Developments The new development market has roared back to life since suffering its worst month of the year in July, according to a report from Marketproof.
New developments notched 259 signed contracts last month for apartments asking a combined $527 million. The median unit price fell 12 percent to $1.45 million, as outer-borough deals made up a bigger piece of the action. All told, contract activity jumped 35 percent month-over-month and aggregate dollar volume increased 17 percent. Buildings completed in the past eight months performed particularly well as resale inventory remained low. Manhattan’s builders landed 117 contracts for units asking $340.6 million. That’s a 33 percent increase in contract volume from August 2019. As activity surged, the median asking price dropped to $1.9 million, a 23 percent dip from the previous month.
Mortgage Rates Mortgage rates hit a 14 year high and may continue to rise as the Federal Reserve looks to tackle inflation. The average rate on a 30-year fixed mortgage hit 5.89% this week, according to a Freddie Mac survey reported by the Wall Street Journal. Rates are roughly double from what they were a year ago and exceeded a recent pandemic high set in June.
More bad news could be on the way for prospective buyers seeking a mortgage. The Fed appears poised to once again lift rates by the end of the month, perhaps by as much as 0.75 percentage points, sending borrowing costs up and possibly spurring another spike in mortgage rates.
Luxury Market Ten contracts were signed last week at $4 million and above in Manhattan, half of the previous week’s total. The volume was $61,219,000, which was the lowest of the year. The post- Labor Day week’s 10-year average of contracts signed is 14