Manhattan home prices remained well above last year’s level during the second quarter of 2014 as this year’s spring trading season failed to reverse a year-long trend of dwindling inventory. Although the number of listings increased 10.5 percent over the quarter, total inventory remained nearly 8 percent below last year’s level – fueling high prices and stiff competition between buyers.
Still, prices showed signs of softening as price fatigue set in on buyers who have faced several years of robust price growth. The StreetEasy Condo Price Index (SECPI) increased by just 0.2 percent over the quarter – the slowest quarterly growth since the fourth quarter of 2012. In another sign of softening prices, the share of all homes listed that saw a price cut increased to 22 percent, up slightly from 20 percent one year ago.
While price growth has softened across all price points, Manhattan inventory continues to be dominated by homes priced in the top – or most expensive – tier. More than 3 in 4 homes listed during the second quarter were priced in the middle or top tiers with a price above $621,000. Co-op listings represented homes in the bottom tier – those that are priced at less than $621,000. Forty percent of all available co-ops were priced in the bottom tier, while just 9.1 percent of condos and 0.7 percent of townhouses were in the bottom tier. Conversely, the majority of condo listings were in the top tier, with 61.3 percent of all condos listed in the top tier compared to 29.2 percent of co-ops.
Despite a recent uptick in inventory and slowing of price growth, the Manhattan market remains a challenging environment for buyers. With the median days on market at just 49 days across all housing types, buyers must act fast on a home amid persistently high competition among buyers.
The slowed price growth in the second quarter is fragile and greatly dependent upon continued inventory growth, which is unlikely to happen in the traditionally slower summer months. Buyers should not expect further price declines as long as there are not any meaningful increases in inventory that get the market back to historically normal levels.