Metro area’s resi market slowdown drags on

September homebuying activity in New York City and its suburbs would look relatively busy if not for last year’s frenzy.

New signed contracts last month were down 20 to 30 percent across the board compared with a year ago in the city and the greater tri-state area, according to a monthly report authored by Miller Samuel for Douglas Elliman.

“The way I think of the market is that activity is above normal levels but it’s down sharply from the frenzy of 2021,” said Miller Samuel CEO Jonathan Miller.

Contracts, listings and sales are down annually because of uncertainty in the market caused by the Federal Reserve, which has been raising interest rates since the spring. That’s caused mortgage rates to double from where they were at this point last year and wreaked havoc with the stock market.

(Jonathan Miller)

Higher interest rates depress signings at the lower end of the market because mortgages become more expensive, and their effect on the stock market depresses activity in the luxury sector.

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“The relationship in the market is normalizing between high and low where the high end is not leading like it was leading since the early part of the pandemic,” Miller said. “The people that are paying all cash are following financial markets and the financial markets are seeing a lot of volatility because of Fed policy.”

In Manhattan, where the annual decline in new contracts continued for the sixth consecutive month, condo contracts fell more than 46 percent year-over-year while new listings fell 2 percent.

The decline in listings occurred for condos asking $20 million or more or under $2 million. Co-op contracts fell 11.6 percent year-over-year and new listings fell 8.6 percent.

In the North Fork single-family market, new signed contracts fell 31 percent, but new listings rose 20 percent — albeit to just 36 from 30 in September 2021. That could be the beginning of a long-anticipated rise in inventory driven in-part by a soft summer rental market.

“Even if inventory is up, it’s still low [historically], and as a result there’s a relatively firm underpinning on prices,” Miller said. That is, buyers are still competing for a small number of available homes.

Activity in the Hamptons is also trending down from last year: New contracts declined year-over-year for the 16th straight month, and listings fell for the third time in four months.

“In the Hamptons it’s been very choppy,” Miller said, explaining that inventory has risen and fallen annually in an inconsistent pattern in recent months. “There doesn’t seem to be a trend at this point.”

A similar scene unfolded in Westchester, where new single-family listings fell by 19 percent and new listings in that sector fell by 17 percent. New listings and contracts in the county’s condo market fell by roughly a third.