Oct. 2 (Bloomberg) -- Manhattan apartment prices rose 2.3 percent in the third quarter to a median of $864,400 as wealthy buyers swept up large, multimillion-dollar luxury condominiums.

The median price of a condo in the nation's most expensive urban market jumped 5.2 percent from a year earlier to $1.12 million. The price of co-operatives, apartment buildings where residents can impose their own financial requirements on buyers, fell 2.4 percent to $668,500, according to a report today by the real estate data company Radar Logic Inc.

Manhattan is outperforming the national housing market as bonus earners and international investors bid up prices and help the city fend off the housing slump. That trend might be threatened as home loans of more than $417,000 become more expensive and Wall Street executives face the prospect of pay cuts brought on by mortgage-related losses.

``Right now there is a lot of uncertainty,'' said Gregory J. Heym, chief economist for Terra Holdings, the closely held company that owns New York brokers Brown Harris Stevens and Halstead Property.

The cost of a 30-year fixed-rate jumbo loan in August jumped to 7.18 percent, the highest in more than 6 1/2 years, according to Bankrate.com. The monthly cost of a $500,000 mortgage rose to $3,380 last month compared with $3,033 last year. That's an 11 percent increase.

Tempering Sales

Rising delinquencies on loans to people with poor or limited credit histories have reduced demand for mortgage backed securities, making it more difficult for buyers to get all types of loans. As mortgage investors have become more risk averse, lenders have also tightened their standards even for buyers with the best credit.

``All these factors could have the impact of tempering the number of sales,'' said Jonathan Miller, a Manhattan-based appraiser and author of today's Radar Logic report. ``It's still a little soon to be borne out in these numbers.''

Higher down payments and income requirements might reduce sales in the fourth quarter or prices next year, Miller said.

Across the U.S., 14 of 25 metropolitan areas posted declines in prices per square foot in July compared with a year earlier, Miller said in a separate report. That's a reversal from last year when prices rose in 18 markets, according to New York-based Radar Logic.

`Funky Financing'

Only New York City; Seattle; Charlotte, North Carolina; Milwaukee; and Atlanta gained more than 1 percent in July. Sacramento and San Diego, California, and Washington all dropped more than 10 percent per square foot, according to the report.

For now, the Manhattan market is holding.

``We never had the funky financing you saw the rest of the country doing,'' said Dottie Herman, president of Prudential Douglas Elliman Real Estate. ``You just don't hear of 5 percent down or zero percent down, or no-doc loans in our market.''

So-called no-doc loans don't require borrowers to document their income.

The number of Manhattan apartments sold in the third quarter jumped 66 percent from a year earlier to 3,499, according to Miller.

The inventory of unsold units fell 32 percent to 5,204 last quarter compared with 7,623 a year earlier, Radar Logic said. It took an average of 123 days to sell an apartment, 27 less than the same period a year before.

East Side Gains

The greatest price gains were in larger apartments, with the average rising as much as 16 percent to $8.53 million for four bedrooms, Radar Logic said.

On the East Side, the average price of apartments with at least four bedrooms jumped 17 percent to $6.6 million. On the West Side, the average of three-bedroom and larger units climbed 46 percent to $4.05 million, Brown Harris Stevens reported.

Manhattan's third quarter sales included twice the number of $10-million-plus transactions as a year ago, according to Heym, who wrote the reports for Brown Harris and Halstead.

The figures include sales in the former Plaza Hotel, which is being converted to condominiums, and transactions at 15 Central Park West, a neo-classical limestone tower designed by architect Robert A.M. Stern and developed by Arthur and William Lie Zeckendorf.

Among the buyers there are Goldman Sachs Group Inc. Chairman Lloyd Blankfein and former Citigroup Inc. Chairman Sanford Weill, who purchased a $42.4 million penthouse with his wife through a trust.

``These are monstrous sales,'' Heym said. ``It's not surprising when you look and see all these new developments that are closing now, it's going to help overall prices.''

Lure of Condominiums

New condos represented 30 percent of the market in the third quarter, according to Brown Harris Stevens. Overall sales were split about evenly between co-ops and condos, Miller said. Condos make up only about one-third of the city's apartment stock.

Condominiums are attracting Manhattanites because they are usually in newer buildings and offer buyers an opportunity to hold the deed to real estate. Co-operatives tend to be older properties and residents hold shares in a corporation that owns the building. Co-op residents also elect a board that evaluates potential buyers.

Co-op prices were pulled down last quarter as more studio and one-bedrooms sold rather than larger apartments. About 56 percent of co-op sales were of apartments in those less expensive categories.

Co-Ops Gain

On a price per square foot basis, co-ops gained 9.2 percent, while available inventory fell 33 percent and the number of sales jumped 67 percent. Those are signs that the market remains healthy, brokers said.

``The traditional co-op is a way of life in Manhattan,'' said Pamela Liebman, chief executive officer of the Corcoran Group real estate brokers. ``If you want to live in one of the grand, old apartments that really define what luxury means to a New Yorker, you better be prepared to buy a co-op.''

Corcoran, the Manhattan-based brokerage owned by Apollo Management LP, also reported that sales volume and prices rose in Brooklyn, New York's most populous borough.

The median price there gained 9 percent to $608,000 compared with $560,000 a year earlier. The number of deals climbed 28 percent to 484, Corcoran said.

To contact the reporter on this story: Sharon L. Crenson in New York at screnson@bloomberg.net

Last Updated: October 2, 2007 14:00 EDT