Manhattan home sales jumped in the third quarter to the highest level since 2007 as buyers rushed to make deals before rising interest rates push costs higher.
Purchases of condominiums and co-ops surged 30 percent from a year earlier to 3,837, the second-biggest quarterly total in 24 years of record keeping, according to a report today from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The number of homes on the market at the end of September fell 22 percent from a year earlier to 4,567, the lowest since Miller Samuel began tracking the data 13 years ago.
An abrupt increase in mortgage rates tipped more buyers into the Manhattan market, where the supply was already tight, according to Jonathan Miller, president of New York-based Miller Samuel. The average rate for a 30-year fixed mortgage jumped from a near-record low of 3.35 percent in May to two-year high of 4.58 percent in August, according to Freddie Mac.
“Rising rates primed the pump in terms of people moving sooner rather than later,” Miller said in an interview. “The fact that it spiked, as opposed to a gradual increase, really drew people in.”
The pool of available homes is shrinking as owners who bought during the boom and then saw values plummet in the crash wait to list their properties until they’ve recovered enough equity to justify a sale, according to Miller. New supply is limited as developers hampered by the credit crisis only recently revived projects and are largely focused on building ultra-luxury condos.
Buyers are rushing to get what remains, shortening the amount of time it takes sell a property in Manhattan to 88 days, a 54 percent drop from a year earlier, according to Miller Samuel and Douglas Elliman. Purchasers agreed to pay the asking price or more in 44 percent of deals in the third quarter, the largest share in five years.
The absorption rate, or the amount of time it would take to sell all the existing inventory at the current pace of sales, was 3.6 months, the fastest in records dating to 2000.
“The competition at every level is fierce,” said Pamela Liebman, chief executive officer of brokerage Corcoran Group, which also released a report on the Manhattan market today. “There are more bidding wars, there are more cash buyers and deals are closing quicker.”
One Corcoran client who was seeking to win the bidding on a unit asked if it would help to send the seller a video of herself and her family, Liebman said. Successful buyers arrive at a showing with the ability to make a deposit on the spot and a lawyer on standby to review a sales contract, she said.
“Some people are calling their lawyers and saying, ‘I’m going to see something I think I might like. Where are you going to be in an hour?’” Liebman said.
Inventory slid 20 percent in the third quarter from a year earlier to 5,771 homes on the market, according to Corcoran’s report. It was the 10th straight year-over-year decline and the lowest level since the beginning of 2005. The median price of deals increased 7 percent to $895,000, the brokerage said.
Other reports issued today on Manhattan sales also showed a scarcity of apartments and a frenzy of buyers eager to acquire them. Listings website StreetEasy.com said 2,927 purchase contracts were signed in the quarter, up 10 percent from a year earlier. Inventory fell 13 percent to 10,995 units for sale, and the median price of completed deals rose 3 percent $850,000.
Brokerages Brown Harris Stevens and Halstead Property reported that median apartment prices rose 3 percent from a year earlier to $870,000, the highest in more than four years. The jump was fueled by an increase in the number of transactions for more than $10 million.
“Things are being bought as soon as they’re put on” the market, said Gregory Heym, chief economist at Terra Holdings LLC, owner of Halstead and Brown Harris Stevens.
“The only thing that might be surprising is that the average and median price didn’t increase more,” he said. “Buyers are very wary about overpaying, but if they see value they’re jumping all over it.”
Miller Samuel and Douglas Elliman reported a 2 percent drop in the median price to $872,000 as a majority of sales in the quarter were of smaller studio and one-bedroom apartments. The share of one-bedroom purchases was 41 percent, the highest in 15 years, suggesting an influx of first-time buyers racing against rising borrowing costs, Miller said.
Listings for luxury apartments, the top 10 percent of all sales by price, didn’t decline as sharply as owners were inspired to test the market after record prices paid for co-ops and condos in 2012, Miller said. Luxury listings declined 2.1 percent from a year earlier to 1,107, Miller Samuel and Douglas Elliman said, while the median price of completed deals climbed 0.8 percent to $4.1 million.
On the Upper West Side, the median sale price of previously owned co-ops climbed 15 percent from a year earlier to $901,000, the highest in the city for such properties, according to Corcoran. Condo resale prices jumped 30 percent to a median of $1.35 million.
Available apartments in the neighborhood are scarce, and the Upper West Side had New York’s fastest absorption rate in September at 2.5 months, Brown Harris said in a separate report.
On the Upper East Side, the median price of resale co-ops rose 3 percent to $843,000, while condo resale prices gained 8 percent to $1.18 million, according to Corcoran.