Key Takeaways:

• Buyers will see more opportunities through the rest of this year amid declining mortgage rates and rising new listings. 

• As more sidelined buyers rejoin the market, the middle third of homes by price is moving faster than the rest, with rising new contracts and fewer days on market. 

• For the first time since 2019, new condo listings this early summer (May through July) surpassed the number of new co-op listings in NYC, as the additional flexibility condos offer can help sellers attract more buyers in an already challenging market.

• As the resale condo market heats up in Brooklyn, successful sellers are poised to take higher profits than last year and compared to other boroughs.

• Queens has become a more competitive market for starter homes, with rising new contracts but declining new listings.

The Worst Times Are Behind Us for NYC Home Buyers

This year has been a challenging one for home buyers, but there are emerging signs that the worst is likely over — including in New York City. With the Federal Reserve widely expected to cut interest rates in September, the average 30-year mortgage rate has been declining steadily. There were 2,709 new listings across NYC in July, an increase of 3.1% from a year ago, and a sign that rate lock-in is easing its grip on NYC sellers.  

Expanded options on the market likely helped buyers find their next home. In July, 1,984 homes entered contract across NYC, 12.5% more than a year ago. These homes spent a median of 74 days on market, one day fewer than in July of last year. 

As more sidelined buyers enter the market, the middle third of homes by price is moving faster than the rest. The price range of the middle third in July was between $750,000 and $1.7M. A typical listing in this price range spent just 61 days on market before entering contract in July, 10 days faster than a year ago. Across the city, 735 homes at this price point entered contract, up 6.7% from July of last year.

Despite high mortgage rates, the number of new contracts in the lower third of the market soared 13.5% year-over-year to 806. These homes priced below $750,000 spent a median of 77 days on market, five days faster than a year ago. Continued declines in mortgage rates will likely increase buyer demand for the middle and lower thirds of the market.  

Following the jump in new listings, the decline in total inventory — the number of new listings and listings already on the market — is coming to an end. There were 17,618 homes on the market in July, just 19 fewer than the total inventory a year ago. As inventory begins to build, buyers will likely seize a bit more negotiating power in the second half of this year. 

While the median asking price in NYC stayed at or above $1.1M — the highest since 2018 — in April through July, it has likely reached its peak. In the second half of this year, cooling inflation and a slowing labor market should pave the way for additional rate cuts by the Federal Reserve after September. As mortgage rates decline and inventory rises gradually, more homes will be within reach for buyers. 

New Condo Listings Outpace New Co-op Listings for First Time Since 2019

For the first time since 2019, the number of new condo listings this early summer (May through July) outpaced the number of new co-op listings in NYC. Between May and July, 3,694 condos were listed for sale in NYC, an increase of 5.5% from the previous year. In July alone, 1,067 condo units were newly on the market, soaring 18% from a year ago, while the number of new co-op listings fell 4.9% to 948 units. The number of newly listed co-ops this May through July also fell to its lowest level since 2016.

Compared to co-ops, condos generally offer more flexible financing rules and simpler application processes for buyers, in addition to a few other key differences in subletting policies and monthly fees. By comparison, co-ops often require a down payment of at least 20% of the sale price, and the board has a right to reject a buyer for any number of reasons. The additional flexibility of condos can attract more buyers in an already challenging market, encouraging these owners to list their homes for sale despite high mortgage rates and broader market conditions.

In 2020 through 2023, more co-op units entered the market in May through July, matching the overall composition of the city’s residential buildings. During the pandemic, historically low mortgage rates led to a surge in buyer demand, and allowed sellers to finance their next home at a lower rate than the one they previously had. As mortgage rates started to increase rapidly in 2022, buyers rushing to get ahead of rising rates led to surging demand. As a result, the tighter restrictions associated with co-ops likely weren’t as much of a deterrent at this time as they are now.

In July, new condo listings were most abundant in Manhattan (584), followed by Brooklyn (325) and Queens (142). The increase was most pronounced in Brooklyn, where the number of new condo listings rose 38% year-over-year. 

Brooklyn Condo Owners Are Poised to Reap Higher Profits This Year

Rising prices and the prospect of high profits are incentivizing condo owners in Brooklyn to test the market. The median sale price of condos in the borough was nearly $1.1M in July, up 9.7% from a year ago. 

From May through July, three in five new condo listings in Brooklyn were owner resale units, with the rest being sponsor units owned by developers. If sold at their asking prices today, these resale condos would deliver a 32% profit to their owners before taxes and other expenses, implying an annual return of 3.8% over the period of investment on average. This is more than double the implied profit of 12% and annual return of 1.6% for Manhattan resale condos.  

These expected profits are much higher than those realized last year. Condos listed for sale in Brooklyn last May through July eventually sold for 19% profit on average before taxes and other expenses, with an implied annual return of 2.8%. In Manhattan, the average profit of condos that entered the market last May through July was 2%, equivalent to an annual return of 0.1%.

The expected profit for sellers is far from guaranteed, but the condo market in Brooklyn has been hotter than other boroughs. A typical Brooklyn condo sold this May through July received 99.4% of its most recent asking price, higher than 97.2% in Manhattan and 98.4% in Queens. In other words, recent condo buyers in Brooklyn were able to negotiate a median of just 0.6% off the latest asking price. 

The rising number of new listings in Brooklyn will add to the borough’s overall inventory, expanding options for buyers. In July, 569 homes entered contract in Brooklyn, 12.5% more than the year before, as recent declines in mortgage rates and rises in inventory eased the borough’s tight market conditions.

Manhattan Leads the City in Overall New Listings

In Manhattan, 1,124 homes were newly on the market in July, an increase of 3.2% from last year. The median asking price of these listings was $1.25M, about the same as last year. Seven out of the 10 neighborhoods with the highest number of new listings in May through July were in Manhattan. The Upper East Side and Upper West Side were the top two neighborhoods, with 841 and 674 new listings respectively.

Typical new listings on the Upper East Side and Upper West Side were priced well above the borough median asking price, at $1.325M and $1.495M respectively. In Chelsea, there were 230 new listings this May through July with a median asking price of $2.088M. One reason for this is that owners of more expensive homes likely have more financial flexibility, and are therefore more willing to list their homes for sale while mortgage rates are high.

Sellers are returning to more affordable neighborhoods in Manhattan as well. Midtown East had the third most new listings in NYC this May through July with a median asking price of $850,000. Central Harlem, coming in 12th, saw 168 new listings with a median asking of $899,000. 

With sellers rejoining the market across price points, more homes are finding buyers. In July, 882 homes entered contract in Manhattan — 16.7% more than a year ago — and spent a median of 85 days on the market. 

Queens Has Become a More Competitive Starter Home Market

With just 534 new listings in July, inventory remains more limited in Queens than in Manhattan and Brooklyn. The number of all new listings in the borough declined 8.7% year-over-year, driven by continued declines in new co-op listings. Despite fewer new listings in July, the number of new contracts rose 6.3% to 402 units, suggesting resilient buyer demand in Queens. With a more affordable price point, co-ops in Queens have traditionally been a reliable source of starter homes. Declining new listings but rising new contracts indicate a competitive market for first-time buyers. 

However, some neighborhoods in Queens are seeing more new listings than others. Buyers can find more affordable options in Forest Hills this May through July, with 199 homes newly listed for sale and a median asking price of $417,000. Three in four new listings in Forest Hills were co-ops near the Long Island Rail Road or E/F subway stops.

Jackson Heights saw 133 new listings this May through July with a median asking price of $400,000. The neighborhood has seen rising popularity due to its more affordable price point and access to public transit. It was named one of our 10 NYC Neighborhoods to Watch in 2024, based on annual growth in user searches on StreetEasy® in 2023. 

Astoria, with the fifth most new listings of any NYC neighborhood this May through July, is a sought-after destination for New Yorkers due to its proximity to Manhattan’s midtown office district. New developments are expanding buyers’ options in Astoria. The number of new condo listings in the neighborhood more than doubled to 112 units since last May through July, and nearly 60% of them were sponsor units. The median asking price of all new listings was $918,000, up 5.6% from last May through July.

Price Cuts Are Becoming More Common, But a Buyer’s Market Isn’t Here Yet

As new listings hit the market this May through July, buyers can expect more options between now and the upcoming fall home shopping season. With cooling competition among buyers, price cuts have become more common citywide compared to last year. In July, 10.4% of homes on the market reduced asking prices, slightly higher than 10.1% a year ago and closer to the three-year average of 10.7% for July between 2017 and 2019. The rising share of listings with price cuts signals a stabilization of the sales market as inventory continues to rise. 

That said, competition for well-priced homes remains fierce due to still-limited overall inventory and elevated asking prices. In July, one in five (21.7%) homes in NYC sold for prices higher than their most recent asking price, slightly above 19.2% in July of last year. While inventory is rising, a large share of homeowners are still locked into a mortgage rate well below what they’d be quoted today, a recent Zillow survey indicates. The expected rise in inventory will likely play out at a gradual pace, suggesting it’s unlikely for buyers to decisively take an upper hand in negotiation.  

In a changing market, buyers should work with trusted agents — like those in StreetEasy’s Experts Network — who can advise them on how to navigate the current buying landscape. Agents can help buyers understand what they can afford considering their budget and various closing costs. Leveraging their networks, agents can also connect buyers with mortgage lenders who can provide pre-approval, which is essential when competing with other qualified buyers. 

At this pivotal moment, motivated sellers must be strategic. While inventory is rising, pent-up demand from buyers suggests well-positioned sellers can still expect compelling offers this year. With more eager buyers likely returning to the market over the coming months, sellers hoping to take advantage of the upcoming home shopping season should act early to prepare their home for listing. The StreetEasy Concierge for sellers can be a great source of advice on how to give a home a competitive edge.

Source:

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