The stats don’t lie: NY’s housing markets are cooling

Contract signings fall across the board; nationally, price growth slows

Market, Cooling
(iStock, Douglas Elliman)

New York City’s post-lockdown real estate bonanza is over.

Pick a category, and contract signings were down last month. Manhattan co-ops? Down 30 percent from a year ago. Manhattan condos? Down 29 percent.

Brooklyn condos, co-ops and single-family homes? All down.

Long Island single-families? Long Island condos? Hamptons single-families? Down, down, down.

Miller Samuel CEO Jonathan Miller lays out the bad news for real estate agents in his monthly report for Douglas Elliman, but the data merely show what they have all felt on the ground.

Miller said the number of contracts signed should have continued to increase through the end of May, as the spring market is usually the busiest.

“I think the real problem right now is that we have boatloads of uncertainty,” Miller said, listing a number of factors including the war in Ukraine, high gas prices, high inflation, rising interest rates and commodity shortages.

New signed contracts for Manhattan co-ops fell across all price points down to a total of 524 last month from 748 in June 2021. The number of Manhattan home sales overall, and the prices of those sales, were strong for the second quarter, but those closings reflect contracts signed last winter and early this spring.

Signed contracts do not always turn into sales, but their numbers reflect a more current snapshot of the market.

New listings of Manhattan co-ops were down 2.8 percent year-over-year, to 858, almost entirely because sub-$500,000 listings fell 18.5 percent to 141. That’s likely a result of price appreciation more than anything. The changes in listings at other price points were not statistically significant.

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Manhattan’s condo market also saw pronounced decreases in the number of new contracts signed while the number of new listings increased.

The 29 percent drop in June’s signed contracts — to 388 from 548 a year ago — included declines for all price points except condos asking $4 million to $5 million, which were flat. Meanwhile the number of new listings rose 14 percent to 808 from a year ago.

New listings for condos priced from $1 million to $4 million saw double-digit annual increases, while new listings for condos from $5 million to $10 million jumped 57 percent, to 85 from 54.

For the Manhattan home sale market as a whole, while prices are higher than they were before Covid, activity is lower.

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“New signed contracts and new listings for June were less than the same period pre-pandemic,” said Miller.

Miller said new signed contracts and new listings in Brooklyn were “well above” pre-pandemic levels, a stark contrast to Manhattan.

Buyers and sellers in Manhattan find themselves in a standoff as the market cools, according to Coldwell Banker Warburg President Frederick Warburg Peters. He said sellers still think they can get top dollar for their property, and buyers are more reluctant to buy, given market uncertainty and rising interest rates, and overestimate how low they can bid.

“Throughout the second quarter, that slowdown has accelerated: fewer signed contracts, fewer bidding wars, more price reductions, and a gradual increase in available inventory,” Peters wrote in his firm’s quarterly report.

In the second quarter, contracts signings for new-development units (typically condominium apartments) fell 16 percent from the previous quarter and 13 percent from the year-ago period, according to Brown Harris Stevens Development Marketing. But dollar volume has been steady in the sector.

New signed contracts in Brooklyn’s co-op market fell nearly 24 percent annually, to 142 in June from 186 at the same time last year, Miller’s report found. They fell for all price points except $1 million to $2 million, where they inched up to 26 from 22. The most significant drop came in the sub-$500,000 category — not because of lack of interest in cheaper units, but because prices have risen so much in the past year.

New listings fell by more than 26 percent and across all price points except the $1 million to $2 million range, which saw an increase to 36 from 30.

New signed contracts for Brooklyn condos fell by 32 percent, to 216 from 318, and across all price points under $4 million. New listings fell by just over a quarter, to 299 from 400, and again across all price points under $4 million.

On Long Island, excluding the North Fork and the Hamptons, signed contracts for single-family homes in June were off by 21 percent, to 2,111, from a year ago, and fell at every price point. Deals for homes priced at under $400,000 plunged by more than 40 percent on a combination of low inventory, price appreciation and rising mortgage rates.

In the Hamptons, they fell to 74 from 130, or 43 percent. And only 30 single-family homes went into contract on the North Fork, down from 50 in June 2021. In Westchester, the drop was 22 percent — and 33 percent for condo contracts.

Fairfield County in Connecticut was an outlier, with contract signings up 17 percent for single-families and 43 percent for condos.

The New York markets reflect what’s happening elsewhere in the country, according to data firm Black Knight, which published a report that found that 97 of the 100 largest real estate markets experienced a slowing or price growth in the past six months.

While home prices grew by a robust 19.3 percent annually in May, that was down from 20.4 percent in April. It was the largest single-month drop since 2006.

That does not mean the market is anywhere near a crash.

“Price gains would need to see deceleration at this rate for more than 12 months just to get us back to a ‘normal’ 3-5 percent annual growth rate,” said Ben Graboske, president of Black Knight Data & Analytics. “That said, the pace of deceleration could very well increase in the coming months, as we’ve already begun to see in select markets such as Austin, Boise and Phoenix.”