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While the number of closings rose sharply in the second quarter compared to the prior quarter, that is due more to the seasonality of the Manhattan market rather than a rebound in activity. Closings are still 35% lower than a year ago. The stat reminds us that the market today is much different from then.
We said in the past few reports that while sales were down dramatically from the year before, they had simply returned to pre-pandemic levels. Unfortunately, that is no longer true as closings in the second quarter of 2023 were 19% lower than the second quarter of 2019.
Both the average and median sales prices for all apartments have also moved higher in the past three months, but each remains 2% lower than a year ago. Prices didn’t rise as much as the number of sales in the past two years, as high levels of supply kept sellers in check. Sellers remained very negotiable in the second quarter of 2023, giving larger price discounts than a year ago, while apartments spent 27% longer on the market.
While the first half of 2023 has been challenging, there are reasons to be optimistic in the second half of the year. The biggest reason for optimism is the dramatic reduction in inflation over the past year. While mortgage rates haven’t come down as much as expected during that time, we believe that will change in the coming months.
Don’t expect to see 3% 30-year rates anytime soon, but then again, we don’t need record low rates to have a healthy housing market. Other positives include the continued recovery of NYC’s economy, the return of office workers, and the calming of the banking crisis.