Key Takeaways:
- Mortgage rates have declined to nearly 6.5%, creating new opportunities for NYC buyers waiting on the sidelines.
- For now, asking prices remain high. Brooklyn had the highest annual increase in median asking price, jumping 13.5% in December to $1.05M.
- Buyers are gradually gaining negotiating power, as the gap between sale price and initial asking price widens, particularly in Manhattan.
The average 30-year fixed mortgage rate fell to nearly 6.5% in the first week of 2024, after peaking at close to 8% in October. While mortgage rates will remain volatile, this lower rate suggests more homes are primed to enter the market this year at more affordable price points than what’s currently available, which will help to level the playing field for buyers. In December, 61% of homes that entered the market in New York City were priced below the citywide median asking price, a notable increase from 52% the December before.
The median asking price of NYC homes on the market remained elevated in December 2023, at just under $1.1M — 10.6% higher than December 2022. At current mortgage rates, the monthly payment on a median-priced NYC home in December was $5,719, up 15.9% from a year ago, limiting the pool of buyers who could afford to stay in the market. As a result, sellers will have to start pricing their homes more competitively, and asking prices will gradually fall below $1M — one of StreetEasy’s NYC housing market predictions for 2024.
Looking to buy an NYC home? StreetEasy’s complimentary, licensed Concierge will give you personalized guidance and match you with an agent.
Asking Prices and Sales Are Up, With Brooklyn in the Lead
Across the city, asking prices remained higher in December compared to the previous year. Brooklyn led the way, with a 13.5% year-over-year growth in its median asking price to $1.05M, followed by Manhattan (6.5% increase to $1.65M) and Queens (1.7% increase to $640,000). Low inventory and strong buyer demand in Brooklyn are continuing to drive up prices in the borough.
A total of 1,593 homes entered contract citywide in December, a 3.9% decline from November, but a 15% increase from December 2022. With a strong reserve of wealthy buyers, sales in NYC were able to withstand elevated mortgage rates in late 2023. The number of homes entering contract in December 2023 was 7.4% above the December average from 2017 to 2019, when mortgage rates were below 5%.
Data on price cuts shows that sellers continue to feel confident. Just 5.7% of NYC listings had a price cut in December 2023, compared to 6.8% in December 2022. Despite higher asking prices, price reductions were least common in Manhattan, occurring in only 5% of listings. By comparison, 6.9% of listings in Brooklyn and 5.7% in Queens offered price cuts in December.
Brooklyn Homes Under $1M on StreetEasy Article continues below
Buyers Can Expect More Room for Negotiation
Despite year-over-year growth in median asking prices, there are emerging signs of buyers regaining an edge in the NYC sales market. Due to low inventory, sellers held firm in 2023, but this year, buyers will see their negotiating power slowly rise. A typical NYC home sold in December 2023 received 95.8% of its initial asking price, slightly below 96.2% in December 2022. Sellers will likely pick up on this widening gap between sale prices and initial asking prices (known as the sale-to-list price ratio). As buyers find more room for negotiation, sellers will likely respond by setting more competitive initial asking prices, leading to a gradual decline in the citywide median asking price.
The median sale-to-list price ratio was lowest in Manhattan, where a typical listing received just 94.9% of its initial asking price in December, down from 95.8% the year before. The ratio was highest in Brooklyn at 97.5%, followed by 95.9% in Queens.
Manhattan Homes Under $1M on StreetEasy Article continues below
Prices Are Most Negotiable in the Luxury Market
Buyers are finding the most room for negotiation in NYC’s luxury market, defined as the most expensive 10% of for-sale listings. The threshold for the luxury market was $4.95M in December 2023, up 10% from a year ago. The median asking price of these luxury listings was nearly $8M, 6.7% higher than a year ago. However, a typical luxury home sold in Q4 2023 received 92.4% of its initial asking price, compared to 96.1% for a non-luxury home. While it’s typical for highly priced homes to sell with larger discounts, the sector’s current median sale-to-list ratio of 92.4% is much lower compared to 95.4% during the same period in 2022 — indicating the upper hand is shifting more clearly from sellers to buyers.
Luxury homes are also taking longer to sell, amid higher financing costs as well as economic and geopolitical uncertainties around the world. In December, 62 luxury listings entered contract, 22.5% fewer than the year before. These listings spent a median of 176 days on the market, 64 days longer than those that entered contract in December 2022. By comparison, non-luxury homes spent a median of 87 days on the market in December 2023, holding steady from 84 days the year before.
Queens Homes Under $1M on StreetEasy Article continues below
What Does This Mean for Buyers and Sellers?
As affordability improves, more homes will be within reach for those looking to buy this year, making it a good time to act. As New York City buyers regain negotiating power, they should have a better chance at finding a home they love without stretching their budget. However, their options remain limited compared to 2019, before the pandemic. There were 14,671 homes for sale in December, up 4.2% from a year ago, but 13.3% below December 2019. With well-priced listings still seeing robust competition, coming up with a strong offer can make a big difference. Working with a buyer’s agent who has hyper-local NYC market experience, like those in StreetEasy’s Experts Network, can be a winning strategy.
For many New Yorkers, saving for a large down payment — often at least 20% — can be daunting. Fortunately, there are numerous mortgage assistance programs that allow buyers to put down less than 20%, and even help pay for closing costs. The State of New York Mortgage Agency (SONYMA) offers a Low Interest Rate Program for low- and moderate-income first-time home buyers, with a lower down payment requirement of 3%. SONYMA’s Conventional Plus Program offers 30-year fixed-rate mortgages with down payment assistance, available for both first-time buyers and previous homeowners with incomes below 80% of the area median. For veterans, SONYMA’s Homes for Veterans Program offers discounted rates and waives the first-time homebuyer requirement.
Declining mortgage rates this year, after staying above 7% for the second half of 2023, will give many homeowners additional financial flexibility to move. That said, the pool of would-be buyers will likely remain limited as mortgage rates stay above 6%, and sellers will be smart to price competitively. If you’re a seller, the licensed StreetEasy Concierge can be a valuable resource to give your home a competitive edge, as well as StreetEasy’s numerous seller tools.
