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We are halfway through August and deep in the dog days of summer.
The Manhattan sales market has slowed down compared to last year, with contracts signed in July down an average of 25%. In July, 816 contracts were signed, a 16% drop from last month, and lower than the historic average of 906.
In August so far, however, we are already trending above the monthly historical average, with more than a quarter of the average deal amount already documented in the first week of the month. One possible reason? Many new development listings have come to market in bulk.
New inventory is on the rise but has dropped about 9% from last month, as sellers avoid listing their units over the slower summer months. By the end of July, 6,734 listings were on the market. If we compare contracts signed decline to that of new inventory, new listings have fallen over the same period at a rate that was even higher, keeping the market at a lively pace.
The average days on the market continue to drop year to date but have slightly risen from last month and the same time last year. It is now 69 days. July 2019’s average was 72 – again, the normalizing market we have been discussing.
The monthly absorption rate stands at 6.6 months – that is the amount of time it would take to clear all existing inventory given the current monthly sales volume. This is closer to 2019 levels and lower than last month by 2.9%. A falling number is an indication of a strengthening market.
Listing discounts continue to fall and are now at 4.1% - nearly 15% down from last month. This is in keeping with the market pulse, or the ratio between pending sales—representing demand—and supply.
In July the market pulse stood at 0.46, up almost 18% from last month and moving steadily from a buyers’ market to a neutral market, with early detections of a sellers’ market.
The rental market continues to break records, with median rents reaching an all-time high for the third time in 4 months. Rents are, once again, the highest they’ve been since 2008. August is the peak of renting season, but rents may also be peaking too, as leasing volume is down across the city. We are likely reaching an affordability threshold, but that doesn’t mean rent prices will drop. The next step will most likely be stability.
Here are my takeaways from where the market is at right now:
Business is still being conducted and inventory is moving. With August trending above average and an increase in traffic to new listings, I recommend sellers list their properties now. October is most likely to see a large increase in new inventory and sellers who wait will experience the consequences of more competition. An alternative could be to list about 3 weeks after Labor Day, allowing existing inventory to clear up and come into the market competitively priced. And let me emphasize this: in this market, you have to be priced well and staged better if you want your listing to sell. I’m looking forward to what September and the fall market will bring. All signs point to a strong market ahead.