New York City’s inventory crunch held back sales for the Corcoran Group and Sotheby’s International Realty, parent company Realogy Holdings reported Thursday.
“There are really a lot of inventory constraints on the high end,” Realogy CEO Richard Smith said during an earnings call. “We think there was a pause.”
Madison, N.J.-based Realogy, whose NRT division owns Coldwell Banker, Corcoran, Sotheby’s and Citi Habitats, pulled in $1.7 billion in third quarter revenue, a nine percent jump from last year’s third quarter.
Net income for the period was $110 million, up from $100 million during the same period last year.
Despite the inventory crunch, NRT was a major driver of the conglomerate’s revenue: The division earned $1.3 billion in revenue, an eight percent jump from the prior year. The number of sales also jumped, by 12 percent year over year, to nearly 100,000 thanks to the acquisition of Coldwell Banker United.
Excluding CB United’s sales, however, transaction volume increased just four percent due to low inventory in New York City and San Francisco, which accounts for 20 percent of NRT’s sales volume, company officials said.
But Manhattan’s new development pipeline could reverse the lackluster trajectory.
“The new development pipeline is very robust and our participation in that is very robust,” said CFO Tony Hull, who estimated that 10,000 new units will hit the Manhattan market in the next few years. “That’s going to be very helpful for the inventory situation because presumably, there’s going to be someone selling an apartment to buy one of the new developments. [And] with that many units coming on, you’re going to see some inventory open up for us to hopefully be able to sell.”