New York City’s real estate market continues to defy traditional expectations, but the strength is increasingly uneven. The upper end of the sales market remains active, supported by limited inventory and buyers who are generally less sensitive to elevated borrowing costs.
The broader sales market is more selective. Higher mortgage rates have reduced affordability for many buyers, keeping transaction volume subdued and placing greater importance on pricing, condition and overall value. As a result, the strength visible in luxury should not be viewed as representative of every segment of the market.
At the same time, those affordability pressures are reinforcing the rental market, as would-be buyers remain renters for longer. The result is a split environment: luxury sales are leading price gains, the more rate-sensitive sales market remains measured, and demand for more affordable rentals continues to build.
New Development Filings Fell Sharply in Q2: Developers filed plans for 387 new buildings totaling 9.2 million square feet—down 33% from Q1. Multifamily filings dropped even more, with 8,064 proposed units across 172 buildings, a 52% decline from the previous quarter.
The 99-unit phenomenon: 19 proposed multifamily projects came in at exactly 99 units, totaling 1,881 apartments, while just nine projects with 100+ units were filed. Only one project exceeded 300,000 square feet, compared with nine in Q1.
Why it matters: The slowdown in larger projects, coupled with the concentration of 99-unit filings, raises questions about whether NYC’s current development incentives are effectively encouraging the scale of housing the city needs.
Manhattan Rents Continue to Climb: Average asking rents rose 1% year over year to $6,556 in July, with studios and one-bedrooms seeing the biggest increases, both up 5%. Two-bedroom rents also rose 4%, while luxury rentals softened, with $12K+ apartments down 3% year over year.
Luxury Market: Twenty-four contracts were signed last week for Manhattan properties asking $4 million or more—nine more than the previous week. Condos led the way over co-ops, 12 to 7, with five townhouses also finding buyers. So far this year, 218 properties have gone into contract at $10 million or more, compared with 202 during the same period last year.
Brooklyn’s luxury market ground to a halt last week. Just seven contracts were signed for Brooklyn homes asking $2 million or more between August 24 and August 30, according to Compass’ weekly report on the borough’s luxury market. The deals included four condos and three single-family homes, representing a combined $18 million in contract volume. That marked a dramatic slowdown from the previous week, when 18 contracts were signed totaling $67 million.
Pied-à-Terre Tax Exemption Deadline Extended: The deadline to file for an exemption from NYC’s pied-à-terre surcharge has been extended to October 6, marking the second extension as the city works through ongoing issues with the rollout. The surcharge applies to single-family homes valued at $5 million+ and co-ops and condos valued at $1 million+ based on DOF assessments. As of August 24, nearly 11,000 exemption applications had been started, with just over 5,500 completed and approximately 2,900 exemptions granted.
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