Inventory Rose for the First Time Since July 2021 as Sales Slowed
Amid higher mortgage rates, sales market activity has slowed materially since this spring. In November, 35% fewer NYC homes went into contract compared to one year ago. Mortgage rates surpassed 7% in early November for the first time in 20 years, which likely means there will be even fewer transactions over the coming months.
Fortunately for buyers, NYC’s for-sale inventory rose 1.7% year-over-year in November to 18,026 – the first yearly increase since July 2021. In the second half of 2021, resurgence in demand driven by record-low mortgage rates drew down available inventory, which intensified competition among buyers in spring 2022. Sales inventory is now rebounding as listings are sitting on the market for longer and more buyers wait on the sidelines.
Home shoppers can expect holiday bargains, but discounts will be modest. 11.7% of active listings on StreetEasy cut asking prices in November, up slightly by 2.1 percentage points from one year ago. The NYC market is drawing a resemblance to 2019, when rising inventory led to more price cuts and tempered sale prices. In November this year, it took 75 days for a typical listing to go into contract – 11 days longer than one year ago when buyer demand was rebounding strongly. The last time a typical listing stayed on the market for 75 days was November 2019, when 11.5% of for-sale listings cut asking prices. Between 2013 and 2018, only 8.2% of listings offered price cuts in November, on average.
That said, accelerating seller withdrawal is preventing buyers from taking the upper hand. In November, the number of new listings entering the market fell 16.7% year-over-year, as many homeowners who locked in low mortgage rates during and prior to the pandemic remain reluctant to sell. As a result, buyers who can afford to stay in the market are competing for a limited number of homes, and well-positioned sellers can expect competitive offers – although more listings are vying for buyers’ attention now compared to last winter.
Sellers in Manhattan Are Pricing Optimistically
Asking prices continued to rise in Manhattan despite rising price cuts and homes spending more time on the market. The median asking price in the borough set a new record in November: at $1.575M, it was the highest since January 2020. However, the typical home sale price in Manhattan, tracked by the StreetEasy Price Index, has been stagnating since August 2022 when it reached its highest point since the start of the pandemic. At $1.1M in November, it was just 0.5% below this August peak.
The steady influx of higher-priced new listings likely pushed up median asking prices, which are more sensitive to changes in inventory composition. The median asking price of newly listed homes in Manhattan was $1.4M in November, up 6% from a year ago.
Manhattan Homes Under $1.5M on StreetEasy Article continues below
Higher asking prices appear optimistic at a time when more sellers are receiving fewer offers, and coming to terms with offering price cuts. Listings in Manhattan typically lingered on the market for 84 days in November: 20 more days than a year ago, but 4 fewer days than November 2019. The share of listings that cut prices in November was up 1.9 percentage points year-over-year to 10.9%. A typical listing with a price cut slashed its asking price by 5.3% – the highest margin since October 2020, when the market was reeling from the early impacts of the pandemic. Higher mortgage rates, financial market volatility, and an uncertain economic outlook are making Manhattan buyers hesitate, despite their typically higher budgets compared to buyers in other parts of the city.
Competition Was Fierce in Brooklyn Among Those With Larger Budgets
Many buyers in Brooklyn have been priced out of the market by higher mortgage costs, with 34.8% fewer listings entering contract in November compared to last year. Discounts were more common compared to last year as well, with 13% of listings cutting asking prices – an increase of 2.9 percentage points from November 2021.
Brooklyn Homes Under $1M on StreetEasy Article continues below
However, competition is still fierce among those looking to buy pricier homes in Brooklyn. Listings typically spent 62 days on the market, roughly the same as November of last year. In comparison, the top third of listings by price point with asking prices at or above $1.375M spent a median of just 56 days on market in November. Listings below that price typically spent 10 more days on market, as the impact of higher mortgage rates fell more heavily on buyers with smaller budgets.
For-sale inventory continued to drop in Brooklyn, limiting the options for buyers who remained in the market. Inventory fell 8.2% year-over-year to 4,482 in November, and the number of new listings entering the market fell 13.9% year-over-year. Sale prices were up 2.5% year-over-year to $695,000 in Brooklyn.
The Market in Queens Remained Strong as New Yorkers Sought Affordability
Neighborhoods in Queens soared in popularity this year, driving up home prices and asking rents – a trend we expect to continue next year as New Yorkers keep searching for affordability. The borough has more affordable options for buyers compared to Manhattan and Brooklyn and continues to see a relatively strong sales market. In November, a typical Queens listing spent 77 days on the market – the same as November of last year and one week shorter than in Manhattan. Sale prices in Queens, measured by the StreetEasy Price Index, rose 1.4% year-over-year to $517,000.
Queens Homes Under $750K on StreetEasy Article continues below
Sellers continued to join the market in Queens, with the number of new listings falling only 3.9% year-over-year. However, cooling buyer demand across the city led many sellers in Queens to cut asking prices. The share of Queens listings with price cuts rose 1.4 percentage points year-over-year to 11.8%.
The Drop in Mortgage Rates Presents an Opportunity for Buyers
In good news for buyers on the market, mortgage rates fell below 6.5% in early December from 7% in early November. Buyers who are financially able to stay in the market will see a nearly $50,000 increase in their home buying budget, based on typical sale prices in NYC in November ($622,000) and assuming a 20% down payment. For those who can afford the financing costs and monthly payments, obtaining preapproval from lenders – with an option to lock in today’s mortgage rate – is a key step in the homebuying process.
While Federal Reserve policymakers slowed the pace of interest rate hikes at their December meeting, they indicated more hikes are on the table in 2023. This means 30-year mortgage rates will remain high in 2023. Rapidly changing mortgage rates create uncertainty, but NYC buyers can use StreetEasy’s Mortgage Calculator to work out a budget they can comfortably afford.
StreetEasy offers free resources for buyers and sellers during a challenging market. Buyers can team up with Expert agents, real estate agents trusted by StreetEasy with local market expertise, to put the best offer on the table amid a rapidly changing market. We measure the performance of Experts to ensure buyers and sellers receive top-notch service. Sellers can also rely on the StreetEasy Concierge for sellers to learn how to give their listing a competitive edge.
Disclaimers: StreetEasy is an assumed name of Zillow, Inc. which has a real estate brokerage license in all 50 states and D.C. See real estate licenses. StreetEasy Concierge team members are real estate licensees, however they are not your agents or providing real estate brokerage services on your behalf. StreetEasy does not intend to interfere with any agency agreement you may have with a real estate professional or solicit your business if you are already under contract to purchase or sell property.
For FSBO postings, the StreetEasy Concierge is meant to provide insight to improve your posting performance on StreetEasy and may refer you to a real estate professional based on your specific needs.
