July 1 (Bloomberg) -- Manhattan apartment sales rose at the slowest pace in more than a year, indicating a surge in demand is easing as prices jump and inventory climbs from record lows.
Purchases of co-ops and condominiums increased 6.3 percent in the second quarter from a year earlier, the smallest gain since the start of 2013, according to a report today from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The median price rose 5.2 percent to $910,000, and the average price per square foot surged 10 percent to $1,268.
Higher prices are encouraging more sellers to list properties and softening competition among buyers. The market is taking a “breather” after sales rose by an average of 28 percent in each of the previous four quarters, said Jonathan Miller, president of New York-based Miller Samuel.
“It’s still an unusually strong, active market but not the frenzy that it was over the last year,” he said in a telephone interview. “As you see rising prices, you see the pace of the market slow. More inventory has come on and there’s less urgency. But it’s still at the early part of that process.”
There were 5,659 apartments for sale at the end of June, up 18 percent from a year earlier. Supply has come off the bottom reached at the end of last year, when inventory was at the lowest level in records dating to 2000, said Miller, a Bloomberg View contributor.
While more homes are on the market, buyers may still face a challenge finding apartments that meet their standards after such strong demand in the past year, he said.
“A good portion of the good product has been picked over,” Miller said. “The market needs a little time for an improvement in quality.”
It took Laurence and Kathryn Strubing, residents of Oyster Bay Cove on Long Island, about six months of searching for a pied-a-terre on the Upper East Side before reaching a deal. The Strubings -- working with Ellen Devens, an associate broker at Brown Harris Stevens -- looked at dozens of properties and many of them seemed “worn,” said Larry Strubing, 70.
Their criteria also narrowed the options. As owners of a 4-year-old golden retriever named Riley, they wanted a dog-friendly building that allowed for part-time residents in the Carnegie Hill neighborhood. They ended up completing a purchase in May for a two-bedroom co-op on 84th Street for $1.9 million.
“I would have thought for approximately $2 million there would have been more inventory, or inventory that better suited our needs,” said Laurence Strubing, a retired sales executive at AT&T Inc. “The apartments we saw were fine. There was nothing wrong with them. But if it’s going to be your pied-a-terre, you don’t want to do major overhauls to get it to a modern look.”
Across the market, second-quarter co-op sales rose 8.8 percent to 1,990. Condo sales climbed 2.8 percent to 1,352.
Prices continued to boom at the high end. Luxury prices -- the top 10 percent of all sales -- jumped 18 percent from a year earlier to a median of $4.97 million, according to Miller Samuel and Douglas Elliman. Sales rose 6.4 percent.
Hall Willkie, president of Brown Harris Stevens, said that there have been 45 sales of more than $10 million so far this year, compared with 16 in the first half of 2013, in part because of the completion of high-end projects such as the One57 condo tower in Midtown.
An apartment on Fifth Avenue sold for $70 million last month, a record for a Manhattan co-op, Willkie said. The buyer of the property, home to the late billionaire Edgar Bronfman Sr., was Egyptian billionaire Nassef Sawiris, the New York Daily News reported.
“There’s a lot of big money,” Willkie said. “The market is extremely strong at the very high end. Extremely strong on the lower end. In the middle it’s chugging along just fine.”
Brokerage Corcoran Group reported a 6 percent increase in median prices and a 10 percent decline in sales compared with the second quarter of 2013. The number of listings fell 2 percent from a year earlier, smaller than the double-digit declines during the previous eight quarters, the company said.
The median price for co-ops on the Upper East Side increased 19 percent from a year earlier to $895,000, according to Corcoran. On the Upper West Side, the median for co-ops increased 14 percent to $860,000.
Inventory is much tighter on the low end of the market, where demand is strong, said Pamela Liebman, chief executive officer of Corcoran Group.
“Buyers are looking, however it’s difficult to help them find what they want, and that’s what’s causing the falloff in volume,” Liebman said in an interview. “A lot of buyers are struggling to meet the new prices.”
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