What slump? Manhattan’s luxury market did well in 2023

While home sales nationwide endured a brutal 2023, Manhattan’s luxury market did pretty well.

Transaction and sales volume did fall for the second straight year, as the post-pandemic frenzy was halted by rising interest rates, but both figures were higher than they were for much of the 2010s.

About 1,200 Manhattan homes asking $4 million or more went into contract last year. That is down from 1,300 in 2022 and an eye-popping 1,800 two years ago, but after those years it’s the highest total since 2015.

Total sales volume was just under $10 billion last year, putting it right in the middle of annual volume totals over the past decade — not a great result, but not abysmal, either. Outside of 2022 and 2021, when volume was $10.3 billion and $15.9 billion, respectively, last year had the highest sales volume since 2015. 

As in other sectors of the market, lack of supply played a role in propping up prices. The average sale price rose last year for condos, co-ops and townhouses, despite fewer sales, in a sign that listings were too scarce for prices to fall.

The numbers demonstrate Manhattan’s desirability and the extent to which wealthy buyers are insulated from mortgage rate hikes. Other markets across the country weren’t so lucky. 

The national existing home sale market was on pace for 3.82 million transactions as of December, according to data from the National Association of Realtors. That would be the fewest since at least 2012, according to data collected by analyst Mike DelPrete. 

An uptick in sales could be in store for 2024. The Federal Reserve in December said it aims to bring down interest rates this year, which could spur homeowners with low-rate mortgages to put their homes on the market.

But after two years of declining sales, real estate executives are taking a wait-and-see approach.

Brown Harris Stevens CEO Bess Freedman said she was “skeptical” about the impact of rate cuts but “cautiously optimistic” about the market improving. Analyst Jonathan Miller took a similar position, saying it’s doubtful that lower rates will mean a “flood” of inventory to the market.

But Berkshire Hathaway HomeServices CEO Steven James said mortgage rates’ falling under 6 percent would “make a huge difference.”

“You want potential sellers to feel comfortable putting their properties on the market,” he said.