Interest rates give Brooklyn and Manhattan the yips

Uncertainty surrounding interest rates is stifling Manhattan and Brooklyn’s housing markets.

June saw new signed contracts and new listings fall year-over-year and month-over-month in both markets, according to a report prepared by Miller Samuel for Douglas Elliman. The decrease in contracts comes after a small bump in both markets in May.

In Manhattan, new signed contracts fell compared with last year — albeit at their slowest rate of decline since last summer — but new listings fell sharply for the third straight month.  

Sellers haven’t adjusted their prices for higher interest rates, report author Jonathan Miller said.

“The market continues to be challenged by the lack of supply,” he said. “The quality of the inventory is declining and quality is defined by pricing in sync with the market.”

A significant bump in activity could come “once the Fed feels it can truly pause for a while,” he said, but the timing is unclear. 

“What you should be looking for is stability in rates,” said Miller. “Every time we see rates stabilize we see a little uptick in activity.”

Co-op and condo contracts fell by 11 percent while one- to three-family contracts fell 40 percent. New listings fell by 30 percent for co-ops, 26 percent for condos and just 2 percent for one- to three-family homes. 

One segment of the market bucking that trend is the luxury market, defined as homes sold at $4 million or above. 

New signed contracts for those homes are up 17 percent over last year — even though new listings are down 30 percent — which Miller credited to a record number of cash buyers, who are less sensitive to rate hikes. Manhattan saw one of the strongest Junes on record, according to data from Olshan Realty, which tracks signed contracts. 

A similar situation played out in Brooklyn, where new contracts and listings fell annually and new listings fell on a monthly basis at their steepest rate this year.

New contracts for co-ops fell by 19 percent, for condos by 16 percent and for one- to three-family homes by 27 percent. New listings for co-ops fell by 23 percent, for condos by 28 percent and for one- to three-family homes by 24 percent. 

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