The late summer heat typically drives buyers out of the city and broker commissions down. This year, it’s driving buyers crazy.
In contrast to the typically quiet end-of-summer market, brokers say they’ve been seeing bidding wars and unheard-of numbers for properties across the city.
The bump in activity coincides with mortgage rates hitting their lowest point since May 2023, wobbling confidence in the stock market and rents remaining at record levels. The first week of August saw the average 30-year fixed rate fall to 6.47 percent from the last period in June for the sharpest weekly decline this year.
“There were a lot of buyers who were in the market, but sort of on the outskirts, and they needed that last final push,” Elliman’s Michelle Griffith said of the favorable conditions.
Buyers have been quick to act on the economy’s changing tides.
In the first two weeks of August, 428 contracts were signed in Manhattan, up 18 percent year-over-year, according to data from UrbanDigs. The total puts August on track to be the first month since May 2023 to beat its historical average, according to UrbanDigs co-founder Noah Rosenblatt.
A turning tide
The August rush follows a July that represented something of a breakthrough for the New York market after a slow start to the summer.
“This was one of the more underwhelming spring markets in recent history,” Miller Samuel CEO Jonathan Miller said.
The lethargy lasted into June. New contract signings were down over 8 percent year-over-year in Manhattan and Brooklyn, according to Elliman’s monthly report. Manhattan slumped further in the month, down over 11 percent, while Brooklyn was up 2.5 percent, albeit against a trough in 2023.
July reversed course with renewed optimism in a fall rate cut. By the middle of the month, futures markets were pricing in a 95 percent probability that the Federal Reserve would reduce rates in September and the 30-year fixed-rate mortgage average had fallen to 6.77 percent.
Contract signings across Manhattan and Brooklyn surged almost 34 percent year-over-year in July, with Brooklyn gaining 54 percent and Manhattan following with an almost 29 percent increase.
“This surge in July suggests there was a lot more optimism about rates going lower over the next year or two, with a rate cut being more tangible in September,” Miller said. “[July] was the first time in 2024 that there has been real movement.”
The race is on
While interest rates might seem less relevant in a city where more than 60 percent of deals are done with cash, Griffith said buyers’ herd mentality can cause a chain reaction. Once a few financed buyers start re-entering the market the race is on, mortgages or not.
“Buyers are definitely coming out of the woodwork,” said Serhant’s Lancelot Watson-Taffe.
At The Huron, a new development in Greenpoint, the broker said he recently turned a bidding war into multiple contracts in the building, where he estimates inquiries have jumped 20 percent since rates dropped.
Griffith said she had a similar rush of interest at 415 Greenwich Street, an eight-story condo in Tribeca, where she had multiple bids on units 2F and 6H before converting one of the losing offers into a buyer on another H-line unit in the building.
Buyers may already be shifting gears in the city, but supply has still been revving its engine.
In July, new listings rose just over 3 percent according to StreetEasy, a meager increase in the face of swelling demand. Sellers — many of whom will also be buyers — should be enticed to re-enter the market by more favorable mortgage rates, but inventory historically has lagged demand runups, Realtor.com senior economist Ralph McLaughlin said.
“Existing inventory will catch up faster because you don’t have to build something,” McLaughlin said. “New supply takes a lot longer to catch up — supply is in a perpetual state of being behind demand.”