Falling mortgage rates spur Manhattan, Brooklyn markets

Brooklyn still more challenged, but 2024 promising for both boroughs

Manhattan, Brooklyn Home Sales Poised to Gain in 2024
(Illustration by The Real Deal with Getty)

Real estate agents will be hoping for more results like December’s in 2024.

Manhattan and Brooklyn saw a positive trend in new signed contracts last month, according to data collected by Miller Samuel for Douglas Elliman. Agents have reason to be optimistic about 2024, according to report author Jonathan Miller.

“I dubbed this year the year of incremental change,” said Miller, who had dubbed 2023 the “year of disappointment.”

“What I think we’re going to see in 2024 is more sales, more inventory and perhaps higher prices.”

Miller said most of the uptick in newly signed contracts last month coincided with a steep drop in mortgage rates that began near the middle of December, when the Federal Reserve announced it was done raising interest rates and would likely lower them this year.

Manhattan enjoyed 5.6 percent year-over-year growth in new signed contracts across condos, co-ops and one- to three-family buildings, while Brooklyn’s annual rate improved from a negative in November to no change in December.

A surge in new signed contracts likely means a surge in closings early next year, said Miller.

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In addition to more contracts, Manhattan’s market gained for-sale inventory last month, up 9.5 percent from the same period last year across all three property types.

“Manhattan isn’t devoid of inventory like the suburbs are,” said Miller. “But the pricing by sellers is still on the high side, so to the brokerage community it doesn’t feel like you have enough supply.”

Brooklyn’s market is tighter. New listings fell nearly 17 percent in Kings County last month.

“Brooklyn has had, since before the pandemic, a much more acute inventory shortage than Manhattan ever did,” said Miller. “Inventory can’t be created as fast as demand wants.”

Miller believes pricing will stay strong this year, despite increased listings, because lower mortgage rates will bring buyers into the market.

Lower rates will incentivize owners to list homes because there will be less of a spread between their current mortgage rate and their next one. Better rates will also bring more buyers into the market to meet the inventory, meaning prices won’t fall too far.

“If we look at this whole pandemic as a saga, 2023 will be the bottom and 2024 is a step beyond the bottom,” said Miller.

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