Key Takeaways:

• New contracts surged in New York City toward the end of September following the decline in mortgage rates.
• Despite the jump in demand, competition among buyers did not flare up as additional sellers rejoined the market.
• The NYC sales market is in a sweet spot where rising demand is balanced by growing inventory. How long this Goldilocks moment will hold depends on what happens next with mortgage rates.

The New York City fall home-shopping season is off to its best start since 2021 following the recent decline in mortgage rates. Across the city, 1,676 homes entered contract in September, 26.4% more than a year ago. The jump in the number of homes entering contract following the first two weeks including Labor Day was the largest since three years ago, as the recent drop in rates encouraged sidelined buyers to rejoin the market.

Lower mortgage rates also brought more sellers to the market, as they could better afford their next home. There were 4,164 new listings in September, a 7.1% increase from a year ago. While many homeowners with outstanding mortgages are locked into a rate well below current levels, the recent increase in new listings suggests that rate lock-in is easing its grip on NYC sellers.

With new listings balancing out new contracts, the total number of homes on the NYC market held steady in September at 17,533, just 0.2% below a year ago. However, inventory remains relatively tight compared to pre-pandemic levels, at 13.3% below September 2019.

Amid tight inventory maintaining competitive pressure, asking prices have remained steady. The median asking price in NYC was $1.1M in September, unchanged since April. A typical home sold in September received 96.2% of its initial asking price, nearly equal to 96.0% a year ago.

The Jump in New Contracts in September Went Beyond a Seasonal Increase

Home shoppers saw a jump in buying power in September as mortgage rates fell from 7.1% to 6.2% a two-year low. The monthly mortgage payment on a median-priced home in NYC with a 20% down payment declined by $684 from May to the end of September.

Against this backdrop, September was a strong month for the city’s sales market. Each week in September saw more new contracts than the corresponding week last year — and the pace of new contracts grew steadily each week. In the first week of September, 349 homes entered contract. By the last week of September, the weekly pace soared to 441 homes.

While the NYC sales market typically gets busier in the weeks following Labor Day weekend, the rise in new contracts this September was larger than typical increases in the past. In the second half of the month, the average number of new contracts per week was 21% higher than in the first half — the sharpest increase since 2021. By comparison, contracts increased just 10% on average from the first to the second half of September in 2017-19.

Manhattan Led the City in New Contracts, With a Boost From the Luxury Market

The number of homes that went under contract in September rose 28.7% year-over-year in Manhattan to 726 homes. The jump in new contracts was sharper than in Queens and Brooklyn, where new contracts rose 17.9% and 26% from the year before, respectively. Downtown neighborhoods continued to see the highest contract volume within the borough, with 233 homes entering contract. However, the Upper East Side saw the largest increase in new contracts from a year ago. The number of new contracts in the neighborhood soared 39.2% year-over-year to 167 homes in September.

The luxury market, defined as the most expensive 10% of the listings in NYC, has shown signs of growth in recent months after holding steady earlier this year. Asking prices in the luxury market have been falling from their highest point since 2018. The starting price of this segment was $4.7M in September, down 5.2% from the peak of $4.95M in December 2023. As asking prices gradually decline, more luxury homes have been finding buyers. Across NYC, there were 70 new luxury contracts in September — a solid increase from 46 a year ago — and 64 of them were in Manhattan.

The increase in new listings has expanded the options for luxury buyers, particularly in Manhattan. In September, 314 luxury homes were listed in Manhattan, an increase of 7.9% from the year before. Rising new contracts, as well as new listings, indicate an improving outlook for the luxury sector after a sharp slowdown in 2022 and 2023, amid higher borrowing costs and volatile financial markets.

New Listings Are Rising Fast in Competitive Brooklyn Market

Brooklyn became even more competitive despite elevated mortgage rates this year and last. In September, the borough’s median asking price rose 5.4% from a year ago to $1.1M, and 480 homes entered contract, a 26% jump from a year ago. The borough’s condo market has been especially competitive, with owners poised to reap higher profits this year due to rising sale prices.

As Brooklyn homeowners looked to leverage strong demand, 1,172 homes entered the market in September, a 21.5% increase from last year. While Manhattan still led the city in new listings with 2,150 homes entering the market, the current number is 1.6% below September of last year.

The sharp increase in sellers returning to the market suggests the Brooklyn market will eventually find a better balance. The total number of available homes rose 5.7% year-over-year in September, with new listings increasing 21.5%. Within Brooklyn, total inventory increased the most in Williamsburg and Greenpoint, where the number of available homes rose 37.4% year-over-year as newly built condos continued to enter the market. 

Inventory Declines in Queens Despite Increases in Manhattan and Brooklyn

There were 3,042 homes on the market in Queens in September, down 3% from a year ago. The recent decline in mortgage rates likely wasn’t enough to bring additional sellers back to the borough, despite growing demand from buyers. Declining inventory and strong demand have led to rising asking prices: the median asking price in Queens was $670,000 in September, 3.4% higher than the year before.

With more affordable price points, co-ops in Queens have traditionally been a reliable source of starter homes. The median asking price per square foot for co-ops was $420 in Queens, significantly lower than $969 in Manhattan. However, the borough’s co-op inventory has been declining year-over-year since April 2022. In September, there were just 1,229 co-ops on the market in Queens, down 2.5% from a year ago. 

Despite declining inventory, the number of new contracts in Queens rose 17.9% year-over-year to 349. Yet, growing demand from new buyers joining the market as mortgage rates fall has led to less room for negotiation. A typical Queens co-op sold in the past three months received 98.4% of its most recent asking price — 0.5% more than last year. In other words, recent co-op buyers in Queens were able to negotiate a median of just 1.6% off the seller’s asking price. 

Not Too Hot, Not Too Cold: a Goldilocks Moment for the NYC Sales Market Is Here

Despite the surge in demand in September, competition among buyers remained steady as sellers rejoining the market held up inventory levels. The NYC sales market is in a sweet spot, in which increasing demand from lower mortgage rates is balanced by rising new inventory. The stability of mortgage rates is key to determining how long the market will remain in these Goldilocks conditions. As long as mortgage rates decline gradually this year and next, transactions could continue to rise while avoiding a flare-up in competition, as the NYC market saw in 2021-22. Those who are financially ready to buy a home can expect a more balanced market with more homes for sale.

Waiting for additional declines in mortgage rates isn’t without risks. While the recent declines have put more homes within reach for buyers compared to last spring, rates likely will remain volatile, as financial markets continue to reassess the Federal Reserve’s next moves. Sharp declines in mortgage rates would result in a hotter-than-usual spring market in 2025, and buyers in the spring would face heightened competition.

Ultimately, determining the right time to buy a home comes down to one’s personal financial situation and local market dynamics. Buyers who are ready to act may find themselves ahead of the competition by joining the market this fall. Skilled agents — like those in StreetEasy’s Experts Network — can advise buyers on how to navigate the current market and when the right time is to buy.

Sellers who want to make the most of what’s bound to be a competitive spring home-shopping season should begin preparing now. With a strong start to the fall buying season underway, sellers should act early to prepare their home for listing. The StreetEasy Concierge for sellers is also available to advise sellers on how to give their home a competitive edge.

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