Buyers Unfazed by Interest Rate Spike: Mortgage Rates Surpass 7%, Yet Demand Remains Strong
Despite the 30-Year Fixed Rate Jumbo Mortgage Index rising above 7% this week, NYC's real estate market continues to experience robust demand, surpassing the pre-pandemic average* for the 18th consecutive week. This sustained consumer optimism suggests a potentially active summer with higher-than-normal buyer activity. The spill-over of strong market momentum from spring, combined with new demand entering the market, further reinforces expectations of an advantageous summer.
After waiting for price drops and lower interest rates over the past year, potential buyers are now taking action, recognizing that market conditions may not improve in the future. This shift in perspective has created pent-up demand as buyers seize the current market dynamics.
Foreign demand is also expected to contribute to the overall strength of the NYC market. Particularly in luxury segments, international buyers are less affected by interest rate fluctuations, adding to the positive market sentiment.
*The average weekly number of contracts signed during the period January 5, 2015, to March 1, 2020
Manhattan Supply
The long-awaited June supply peak has arrived in Manhattan's real estate market, as the number of available units decreased from 7,584 to 7,543 this week. This aligns with historical trends and suggests a potential impact on pricing, as low supply can drive prices upward. However, the current supply level, combined with strong weekly demand indicated by the number of contracts signed, indicates that supply alone may not be a significant factor influencing price increases. Understanding the supply count is crucial in evaluating the market dynamics and its potential effects on pricing trends.
Manhattan Supply | Chart courtesy of UrbanDigs
Brooklyn Supply
In Brooklyn's real estate market, we have also reached the anticipated peak for June. The supply of available units decreased from 3,332 to 3,312 this week right on cue with seasonal trends. As with Manhattan, the supply-to-demand ratio alone won’t raise prices since there are far more units available than what’s needed to satisfy a weekly demand of 149 units.
Brooklyn Supply | Chart courtesy of UrbanDigs
Manhattan Pending Sales
Manhattan's pending sales chart provides a clear picture of market expectations, and this week, the number of pending sales increased from 3,183 to 3,288 units. This suggests that the borough has not yet reached its expected peak for June.
Manhattan Pending Sales | Chart courtesy of UrbanDigs
Brooklyn Pending Sales
Like Manhattan, pending sales in Brooklyn reached a seasonal trough in February, and we expect a peak in June. This week, the number of pending sales increased from 2,023 to 2,068 units, suggesting that the borough is moving closer to its anticipated June peak — but we are not quite there yet.
Brooklyn Pending Sales | Chart courtesy of UrbanDigs
Manhattan Contracts Signed
242 contracts were signed this week, well above the pre-pandemic benchmark.*
*The average weekly number of signed contracts from Jan 5, 2015, to Mar 1, 2020.
Brooklyn Contracts Signed
This week, 149 contracts were signed, indicating sustained buyer interest and engagement in the market. It is worth noting that Brooklyn has experienced six consecutive peaks since the pandemic, with contract signings surpassing the pre-pandemic average.
New Development Insights
As reported by Marketproof, this week, 75 new development contracts were reported across 44 buildings. The following was the top-selling new developments of the week:
- THE HARPER (Yorkville) and TRIBECA GREEN (Battery Park City) reported 6 contracts
- ONE MANHATTAN SQUARE (Two Bridges) reported 5 contracts
