Market Activity Levels Off After Early-Year Surge Amid Push-Pull of Higher Rates

Following a strong start to the year, real estate activity in Manhattan and Brooklyn leveled off. In Manhattan, new listings and contract signings slowed, reflecting ongoing inventory challenges and some hesitation among buyers navigating elevated mortgage rates. Brooklyn continues to show relative stability, with new listings holding steady and contract activity remaining above pre-pandemic levels.

The shifting interest rate environment has introduced a push-pull dynamic in buyer behavior. For some, rising rates may create a sense of urgency to act sooner, fearing further increases. For others, the hope of rate reductions in the near future may prompt them to wait before making a move. This week, mortgage rates edged slightly lower after more moderate inflation readings, easing recent concerns about the Federal Reserve potentially pausing rate cuts or possibly raising rates. While the latest data reassures the market that a rate hike by the Federal Reserve is unlikely in the near term, mortgage rates remain higher—nearly 100 basis points above where they stood just four months ago.

The Elegran | Forbes Global Properties Consumer Sentiment Index reflects this, dropping from -3 to -24 over the past week. As the market normalizes and buyer sentiment adjusts to these conditions, pricing and timing remain important.

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Manhattan Supply

After popping last week, the number of new-to-market listings this week decreased by 25% as 228 new listings came on the market.? This new-to-market supply is 6% less than last year and 28% less than the same week in 2019, illustrating the continued supply constraint.? Overall supply ticked up 1.2% to 5,333, and this marginal increase likely stems from slower transaction activity, as properties remain on the market longer in the current economic climate. The low supply compared to historical norms continues to impact buyer behavior, increasing competition for available properties and maintaining upward pressure on prices in certain market segments.

Brooklyn Supply

Unlike Manhattan, Brooklyn saw 162 new listings come to market this week, just one fewer than the previous week. This week’s new-to-market total is 10% lower than the same period last year but 34% higher than the same week in 2019, reflecting a relatively stronger pace of new listings compared to pre-pandemic levels. Overall supply in Brooklyn increased by 1.2% to 2,788 units but remains 3% lower than last year. This slight uptick in inventory offers buyers more options, but the year-over-year decline in total supply continues to signal lingering inventory constraints in the borough.

Manhattan Pending Sales: Pending sales were virtually unchanged this week, decreasing by 2 to 2,894.

Brooklyn Pending Sales: Pending sales decreased by nearly 1% to 1,842.

?Manhattan Consumer Sentiment

Similar to new-to-market supply, contract activity slowed this week, with only 130 contracts signed—a 19% drop from the previous week. This week’s contract volume is 4% lower than the same period last year and 17% below the levels seen in 2019. As a result, the?Elegran | Forbes Global Properties Manhattan Consumer Sentiment Index?remains negative for the fourth consecutive week, declining further from -21 last week to -35 this week.?

Brooklyn Consumer Sentiment

Contract activity in Brooklyn slowed this week, with 80 contracts signed—a 13% decrease from the previous week. While this week’s contract volume is 4% lower than the same period last year, it remains 19% higher than the same week in 2019. However, the slowdown has impacted overall sentiment.?The Elegran | Forbes Global Properties Brooklyn Consumer Sentiment Index?dropped from +26 to +10. This decline indicates that while Brooklyn’s market remains stronger than historical norms, buyers exhibit increased caution amid factors such as elevated mortgage rates and limited inventory.

New Development Insights?

Marketproof reported that 21 new development contracts were signed in 18 buildings this week. The following buildings were the top-selling new developments of the week:

• Front and York - Front Tower (Dumbo), Williamsburg Wharf (Williamsburg), and 65 Eckford Street (Greenpoint) each signed 2 contracts.