2023 was a tough year for the Manhattan market. High mortgage rates,

recession fears, financial market turmoil, and world events sapped market

confidence to drive sales, inventory, and prices lower. But the year ended

with signs of stabilization. In Fourth Quarter 2023, sales and inventory

moderated minimally versus last year, and even improved for parts of the

market; inflation cooled without a major downturn; and mortgage rates

began to decrease. Heading into 2024, some of 2023’s challenges remain,

but hopefully this quarter offers a backdrop to improve upon in 2024.

Sales fell for the fifth straight quarter in Fourth Quarter 2023 but less so

than earlier this year. Marketwide, closings fell 3% annually to about 2,800

sales and $5.47 billion in volume. Resale co-ops—the largest product type

in Manhattan—saw sales rise 2% year-over-year, the first annual increase

since mid-2022. Signed contracts fell 3% annually to about 2,300 deals, but

many weeks in Fourth Quarter 2023 were stronger than 2022.

Listed inventory fell for the sixth time in two years this quarter. As of

mid-December, 6,385 units were actively listed in Manhattan, down 2%

annually. As seen throughout 2023, a diminished number of new listings

and few new development launches caused the decline. New listings hit

a four-year low this fall as sellers, many locked into low mortgage rates,

remained hesitant to list. At the same time, new developments with about

100 units launched for sales, the slowest fall for launches in 15 years. Finally,

some notable increases in demand cut into supply, such as the increase in

co-op sales and a small uptick in $1M to $2M closings.

Despite lower supply, anxiety about the state of the market continued

to hamper buyer urgency, with days on market up 6% annually. But

well-priced properties still sold quickly. One in three contracts signed

this quarter did so in 60 days or less, up from one in five last year.

Prices in Fourth Quarter 2023 adjusted to weaker demand, and buyers’ lower

purchasing power. Average and median price per square foot fell year-over-

year for the second consecutive quarter, down 5% and 9% to $1,785 and $1,305,

respectively. Manhattan prices are now comparable to levels seen in 2015 and

2016. Nevertheless, absolute median and average sale price statistics rose

minimally versus a year ago. This was not due to price appreciation; rather,

closings shifted to larger units, where buyers are more likely to pay all-cash.

2024, the year could mark an important pivot for the market. Some of 2023’s

trends may persist, with new challenges like the US presidential election

looming. At the same time, mortgage rates are forecast to fall further and rents

are stuck at record highs, which could combine with lower prices to unlock

pent-up demand. No matter what 2024 has in store, we are as always confident

in the long-term attractiveness and resilience of the Manhattan market.