Manhattan home prices rise in early sign of a market rebound

MANHATTAN home prices rose for the first time in more than a year, as surging high-end sales propelled the market and lower mortgage rates set the stage for a broader recovery in 2024.

Purchases closed at a median of US$1.2 million in the fourth quarter, up 5.1 per cent from a year earlier, according to appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. It was the first annual increase since the third quarter of 2022, the firms’ data show.

While the overall number of transactions declined, sales at or above US$5 million jumped in Q4. In a period when mortgage rates were climbing towards 8 per cent, more than two-thirds of Manhattan buyers paid cash, the highest share since Miller Samuel started tracking the metric in 2014.

The market may already be swinging back in mortgage borrowers’ direction. Financing costs have fallen sharply in the past couple of months as traders gain confidence that cooling inflation will enable the Federal Reserve to cut interest rates this year.

Contracts to buy homes in Manhattan – a more timely indicator of demand than closed sales – rose in December from a year earlier, according to a separate report by Miller Samuel and Douglas Elliman.

The increase signals the start of a process in which lower interest rates bring in more buyers, and prompt more sellers to list their homes. Prices likely would increase in that scenario, said Jonathan Miller, president of Miller Samuel.

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“The market is giving early signs that it’s beginning to rebound,” Miller noted. “It’s not going to do an about-face overnight, but it’s trending to stronger performance in terms of transactions and inventory and, to a certain degree, prices.” BLOOMBERG