Key Takeaways:
- The number of homes entering contract rose 6.7% from December to January as buyers returned to the market amid declining mortgage rates.
- Highly priced homes are taking longest to sell, keeping the city’s median asking price elevated as they continue to sit on the market.
- Elevated asking prices and mortgage rates are increasingly driving sellers to offer concessions in an attempt to attract buyers.
In New York City, 1,668 homes entered contract in January, a 6.7% increase from December. New contracts tend to rise in January as buyers return to the market after the year-end holidays. However, this year’s jump was slightly higher than the average over the past five years (2.6%), as declines in mortgage rates in November and December allowed some buyers to reenter the market.
Despite the recent decline, mortgage rates and median asking prices remain elevated, limiting the pool of buyers who can afford to stay in the market. The monthly mortgage payment on a median-priced NYC home with 20% down rose 16.1% year-over-year to $5,619 in January. Meanwhile, the city’s median asking rent is turning a corner: it was $3,500 in January, ticking up just 0.1% from a year ago, the slowest growth since September 2021. With a large number of would-be buyers still sitting on the sidelines, those who can afford to stay in the sales market can now expect more room for negotiation.
Manhattan Homes Under $1M on StreetEasy Article continues below
High-Priced Homes Are Taking Longer to Sell
The median asking price in NYC was $1.095M in January, up 11.7% from a year ago. This elevated price point is due to the slowdown in the luxury market, defined as the most expensive 10% of for-sale listings ($4.975M+ this January). More expensive homes, including those in the luxury segment, are taking longer to sell amid higher financing costs. It took the most expensive 20% of homes on the market a median of 134 days to sell — 15 days longer than a year ago — while homes at lower prices are making up a larger share of those newly under contract. As a result, the median asking price of homes on the market remains high. By comparison, the median asking price of NYC homes entering contract was $925,000 in January, 15.5% lower than the $1.095M median asking price of all homes on the market.
In Manhattan, where many of these luxury listings are located, the median asking price rose 8.4% year-over-year to $1.68M in January. However, the typical luxury listing in Manhattan received only 93.2% of its initial asking price, a decline from 95% in January 2023, suggesting the upper hand is shifting more clearly from sellers to buyers at the highest end of the market. Amid limited inventory, the median asking price in Brooklyn was $1.05M, 16.8% higher than a year ago. In Queens, where the median asking price was up 4.2% year-over-year to $624,900, buyers can find a wider range of affordable homes.
NYC Sellers Are Increasingly Offering Concessions to Attract Buyers
While the typical NYC home received 96.3% of its asking price in January, up from 95.4% a year ago, buyers are increasingly finding other areas to negotiate. As buyers gradually regain negotiating power, NYC sellers are increasingly willing to offer concessions explicitly in their listings. Seller concessions typically help reduce closing costs for buyers, and are a way to attract more home shoppers without reducing the asking price. For instance, sellers may agree to cover costs such as transfer fees (also known as flip taxes) and home inspection fees, or offer closing credit (a cash payment given to the buyer at closing).
Related content from StreetEasy
In September 2023, when mortgage rates were above 7%, the share of for-sale listings mentioning seller concessions was 2.7%. While the average mortgage rate has declined to 6.7% since then, seller concessions in January have held steady at 2.3%. This is a significant increase from just 1.4% on average in 2021, prior to the rapid increases in mortgage rates. As concessions are often negotiated into sale contracts and may not be explicitly stated in the listing, the actual number of deals with seller concessions is likely higher than what can be inferred from listing information.
In general, NYC buyers are more likely to find concessions among sponsor units. About 7% of sponsor condo units offered concessions in January, as developers often have more flexibility to offer various incentives to buyers. One type of concession that has recently soared in popularity is a rate buydown. When applying for a mortgage, a buyer can elect to pay a higher origination fee (or “points”) for a lower rate. Sellers can then offer to “buy the rate down” or “pay the points” to lower the buyer’s monthly mortgage payments for the first few years, or sometimes permanently. In January, 1.7% of sponsor condos offered rate buydowns, a significant increase from 0.1% on average in 2021.
However, compared to the national market, seller-paid rate buydowns remain less common in NYC due to the large number of co-ops with stricter financing requirements. In a Zillow survey of recent buyers nationwide, two in five (40%) buyers said they received a rate buydown in 2023.
Brooklyn Homes Under $1M on StreetEasy Article continues below
New Inventory Jumped Following Recent Declines in Mortgage Rates
Declining mortgage rates since late 2023 have provided many homeowners with additional financial flexibility to move. In January, 3,083 homes were newly listed on the market, a 4.2% increase from January of last year. Further declines in mortgage rates will likely bring even more new listings onto the market, as sellers grow more comfortable trading in the low rates they secured before or during the pandemic for a rate that’s only slightly higher.
Among this new inventory, 1,385 listings were in Manhattan, up 2.3% from a year ago, followed by 632 in Queens and 830 in Brooklyn. The number of new listings in Queens was 7.3% higher than a year ago, as new developments continued to hit the market. Among 632 homes new to the market in Queens, 13.8% of them were sponsor units in brand new condo buildings.
Queens Homes Under $1M on StreetEasy Article continues below
What Does This Mean for Buyers and Sellers?
Although buyers are regaining the upper hand, with limited homes on the market, competition for well-priced listings isn’t going away. In NYC, close to one in five (17.4%) homes sold for more than their initial asking price in January. Coming up with a strong offer is crucial, and working with a buyer’s agent with local NYC market experience — such as those in StreetEasy’s Experts Network — can be a winning strategy.
Declining mortgage rates this year will continue to put more homes within reach for would-be buyers. However, while highly volatile, mortgage rates will likely stay above 6%, limiting the number of buyers who can afford to stay in or reenter the market. If you’re a seller, a smart pricing strategy can increase the likelihood of receiving strong offers. Give your home a competitive edge by contacting the licensed StreetEasy Concierge, or exploring StreetEasy’s numerous seller tools.
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.
