NYC Rents Slipped in September, Poised to Fall Farther if Fed Cuts

As mortgage rates go, so goes the median rent.

The price of a New York apartment dropped to $4,200 last month, marking the fourth time in five months rents fell annually, according to a Douglas Elliman report by appraiser Jonathan Miller.

In the same period, the 30-year fixed rate mortgage ticked lower, creating a window for tenants to trade leases for deeds, free up rental units and relieve pricing pressure in a city where rents remain miles above pre-pandemic highs.

Those new availabilities cropped up in Manhattan, where inventory grew for the 13th month straight, and across the East River in Brooklyn and Queens, where listings surged for the 8th consecutive month and rents ticked lower year over year.

In Brooklyn, the median price was $3,650, a 1.4 percent decline; In Queens, it came in at $3,500, about a 1 percent decline.

For those falling prices, renters can thank — and landlords can curse — the Federal Reserve.

Mortgage rates tracked lower on the expectation the Fed would cut rates at its Sept. 18 meeting. The Federal Funds rate influences borrowing rates for homebuyers.

After the central bank delivered on expectations, mortgage application volume surged to the highest level since mid-2022, according to the Mortgage Bankers Association.

The Fed has projected more rate cuts to come, so rents should slip lower this fall. Seasonality will also drive declines, given fewer tenants apartment hunt in the colder months.

But the decline “may not be as much as tenants hope for,” Miller said.

How far and fast the Fed cuts is still unknown, and recent economic data has thrown another variable into play.

The jobs report published Oct. 4 showed stronger-than-expected hiring in September, spurring market projections the Fed could ease the pace of cuts. In the days after the report, MBA data showed mortgage rates had risen and application volume had slipped 5 percent from the following week.