Manhattan rents in March cooled nominally, signaling the city’s rental market is locked in stasis and prices are unlikely to give until mortgage rates do.
The median rent for an apartment clocked in at $4,100, a 1.8 percent annualized decline from February, according to a Douglas Elliman report by appraiser Jonathan Miller.
The modest dip is the first since November. The larger narrative, said Miller, is that prices “have been moving sideways since the fall.”
Miller tied the holding pattern to “highly favorable” economic conditions: Unemployment is low and wage growth is outpacing inflation, meaning tenants are earning enough to make rent.
Meanwhile, elevated mortgage rates are keeping would-be homebuyers in their rentals, stoking demand and prices.
The average interest rate on a 30-year, fixed-rate mortgage on Wednesday was 7.3 percent, the highest since November, according to Mortgage News Daily. The spike followed a higher-than-expected inflation report, which could cause the Federal Reserve to delay its planned rate cuts.
“Rents seem to be holding as … mortgage rates seem stuck around 7 percent,” Miller said.
In Manhattan, bidding wars hit a 20-month peak. In Brooklyn, where the median rent was $3,500, the same as a year ago, the number of new lease signings broke a record.
Rents likely slipped slightly from the previous month because tenants continue to lease smaller apartments, Miller said. The average size of newly leased units shrunk by nearly 8 percent year-over-year in Manhattan, the seventh straight month of declines.
“Same thing happened in Brooklyn,” Miller added, specifying that the average size fell by nearly 6 percent from a year ago.
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