Real-Time Indicator Shows Manhattan Housing Market Quickly Cooling

Appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate wrote in a new report that Manhattan’s residential market showed signs of cooling after a post-lockdown buying surge.

Jonathan Miller, president of Miller Samuel, said a “spike in interest rates, inflation, economic uncertainty, and the war in Ukraine” has resulted in a plunge in newly signed contracts between April and June. Newly signed contracts jumped to 1.4k in March as the 30Y mortgage began to soar. Shortly after, costlier mortgages curtailed buyers, and new contracts tumbled to as low as 923 in June. 

Source: Bloomberg 

“This is a quick pivot from an overachieving market to a market that’s being challenged by an unprecedented amount of uncertainty,” Miller said. The sharp downturn in newly signed contracts is part of prospective homebuyers heading to the sidelines because of turmoil in stocks, bonds, and crypto, interest rate increases, and mounting fears of an imminent recession.

This uncertainty has translated into fewer bidding wars, slumping signed contracts, and price reductions on listings as inventory gradually builds. 

Manhattan’s decline in newly signed contracts comes as the median sales price for the second quarter increased to a record $1.25 million. 

“Contracts are the best real-time indicator of market performance,” Garrett Derderian, director of market intelligence at brokerage Serhant, told Bloomberg. He believes third-quarter contract figures “will be bleaker.” 

It appears that the slowdown in Manhattan’s residential market accelerated into June and could easily lead to slowing sales in all boroughs. 

McKenzie Ryan, a top New York broker with Douglas Elliman, told CNBC the number of buyers showing up for open houses has fallen off a cliff. She said an April listing attracted 31 people to the house. A similar listing she held last month only brought in four people. 

“My clients in tech are just bracing right now for whatever happens … Some people have seen a steep loss in wealth since the start of the year,” Ryan said. 

The signs of a shift are still early, though it could soon indicate Manhattan’s residential market is set to peak, then reverse.