The median asking price in NYC jumped above one million dollars in April ($1,049,000) for the first time since June 2018. That’s 7.6% higher than in April 2022, when buyers were rushing to sign deals and lock in lower mortgage rates. In NYC and across the nation, the return of buyers this spring, combined with low inventory, is fueling competition for homes.
In April 2023, 2,092 listings went into contract, 29% fewer than April of last year. That said, with today’s elevated mortgage rates, it’s no surprise that sales this year have been more modest compared to 2021 and 2022, when unusually low mortgage rates led to surging buyer demand. The important trend to note right now is that buyers have not retreated from the market, even though mortgage rates have more than doubled since early last year. All of this has led to one of the strongest sales markets so far this year compared to the past decade, with 7,925 sale contracts signed. This is the highest springtime record since the global financial crisis of 2007-2008, excluding 2021 and 2022 when unusually low mortgage rates and pent-up demand during the pandemic boosted sales.
For-sale listings in the city spent a median of 62 days on the market before entering contract in April, about two weeks (17 days) slower than April 2022 and just three days faster than April 2019. The city’s housing market was on a correction course in 2019 due to a glut of unsold condo inventory. Now, current market conditions are nearly the opposite of 2019: there’s a shortage of inventory relative to demand, particularly for pricier homes as buyers who can afford higher mortgage payments remain in the market. There were 17,680 NYC homes for sale in April, up 1.7% from April last year and still 11% below April 2019. Across the nation, for-sale inventory in April was 45.8% below April 2019 levels despite steady buyer demand, according to Zillow, StreetEasy’s parent company. Consequently, well priced homes relative to comparable listings on the market right now stand a good chance of receiving strong offers in and outside NYC.
Manhattan Homes Under $1M on StreetEasy Article continues below
Buyers With Higher Budgets Are Actively Shopping
The most popular homes right now are those priced between $700,000 and $1.6M, roughly the middle third of the current market by price point. With higher incomes and savings, buyers in the market for these homes can afford to stay in the market despite elevated mortgage payments. There were 5,824 listings at this price point in April, down 17% from April 2019. These listings received 14.3% more inquiries from home shoppers on average in April this year than in 2019. As a result, a typical home priced between $700,000 and $1.6M sold in 54 days, more than two weeks (17 days) faster than homes priced below $700,000.
The luxury segment — the top 5% of the market priced above $3.5M — also saw steady buyer activity. In April 2023, 125 listings at this price point entered contract, compared to 146 in April of last year. An average listing spent 121 days on the market before entering contract, mostly unchanged from a year ago. The luxury market is normalizing after its record-breaking performance in 2021 when 1,772 homes sold above $3.5M, close to triple the total luxury sales in 2019. Low mortgage rates and strong stock market performance boosted sales despite the pandemic.
Buyers on a Budget Are Feeling the Pinch, But Remain Engaged
Buyers in the market for more affordable homes also saw strong competition, although it wasn’t as fierce as the market for more expensive homes. An average listing priced below $700,000 — roughly the bottom third of the current market by price point — received 13.7% more buyer inquiries in April of this year compared to April 2019. These homes are popular among first-time buyers or those hoping to downsize, due to lower carrying costs including monthly mortgage payments and maintenance fees.
Brooklyn Homes Under $1M on StreetEasy Article continues below
The increase in mortgage rates made it more difficult for many buyers to find a home within their budget. The monthly payment on a median-priced home in NYC rose 25% year-over-year to $5,244 in April this year, assuming a buyer makes a 20% down payment and keeps the monthly payments below 28% of gross monthly income, the maximum debt-to-income ratio commonly imposed by lenders. This is more than double the maximum monthly payment the average family can afford ($2,600), assuming they earn the median combined income of an NYC family with two working adults.
Fierce competition despite the sharp jump in monthly payments is due to limited inventory. The inventory of listings priced below $700,000 in April was down 6% compared to a year ago, and 10% below April 2019. The number of new listings entering the market declined 15% compared to a year ago and 3% compared to April 2019. The drought of new listings is a key reason the inventory of affordable homes remains low.
Although overall inventory remains low, buyers can still find affordable homes across NYC. The neighborhood with the most listings below $700,000 was Forest Hills, Queens, where in April there were 299 listings below this price point. Next up was Lenox Hill, Manhattan with 215 listings, and the next three were Jackson Heights in Queens (187 listings), Riverdale in the Bronx (165 listings), and Rego Park in Queens (145).
Don’t Just Wait for Mortgage Rates to Drop
High mortgage rates have pushed many buyers to the sidelines. However, for those who can afford to stay in the market, putting off the decision to buy in order to wait for lower mortgage rates may not be the best strategy. It’s notoriously difficult to predict where mortgage rates will go. 30-year fixed mortgage rates have come down slightly since March of this year, as financial markets assess the national economic outlook in the wake of recent turmoil in the banking sector. However, the labor market remains strong and inflation has been slow to cool. All this means mortgage rates will likely remain elevated throughout this year with heightened volatility.
Queens Homes Under $1M on StreetEasy Article continues below
Moreover, there’s no sign of a sharp increase in for-sale inventory with the potential to ease sale price growth more meaningfully this year. For-sale inventory is improving, but still 11% below its pre-pandemic level. Homeowners who secured low mortgage rates before and during the pandemic remain unwilling to give up their low rates. The number of homes newly listed for sale in NYC declined 20.4% year-over-year in April, the eleventh consecutive month of annual declines. Across the nation, there were 28% fewer new listings than last April according to Zillow.
The decision to buy a home ultimately depends on a buyer’s personal financial situation and long-term goals. Early in the home shopping process, it’s important to work out an affordable budget for monthly payments including mortgage interest and maintenance fees, using tools such as StreetEasy’s Fixed Rate Mortgage Calculator. Working with a trusted lender and an experienced agent can help identify the best mortgage terms for individual financial circumstances. It’s also important to shop around to find the best possible mortgage rates. A recent survey by Zillow found 72% of would-be buyers have not shopped around, nor have any plans to shop around, for their mortgage. Taking the time to make an educated decision and consulting with qualified lenders can help identify the right option for one’s personal financial situation.
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Buy with an ExpertFinancial Resources to Put Homeownership Within Reach
Saving for a 20% down payment may seem daunting for many New Yorkers, but there are numerous mortgage assistance programs that allow buyers to put down less than 20% without extra costs. For example, 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 Homes for Veterans Program offers discounted rates and waives the first-time homebuyer requirement for veterans. Lastly, the city’s HomeFirst Down Payment Assistance Program offers qualified first-time buyers up to $100,000 toward a down payment or closing costs, with just a 3% minimum down payment required.
Disclaimers: The information provided was extracted from StreetEasy listings and its expansive internal database. The contents of this article are intended for informational purposes only and not intended as a complete recitation of the market.
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 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. StreetEasy earns a referral fee from successful Experts’ transactions, at no cost to you.
