T
he summer heat is driving buyers crazy this year, unlike previous years when the market was quiet during this time. Brokers have reported bidding wars and record-high property prices across the city. This surge in activity is linked to mortgage rates hitting their lowest point since May 2023, causing uncertainty in the stock market and high rents. In the first week of August, the average 30-year fixed rate dropped to 6.47 percent, marking the sharpest weekly decline this year.

    Buyers have been quick to respond to these changes in the economy. In the first two weeks of August, 428 contracts were signed in Manhattan, a significant increase of 18 percent compared to the same period last year, according to data from UrbanDigs. This puts August on track to be the first month since May 2023 to exceed its historical average, according to UrbanDigs co-founder Noah Rosenblatt.

    This August rush follows a July that marked a breakthrough for the New York market after a slow start to the summer. Miller Samuel CEO Jonathan Miller noted that the spring market was underwhelming, with new contract signings down over 8 percent year-over-year in Manhattan and Brooklyn, according to Elliman's monthly report. However, July reversed course with renewed optimism due to a potential rate cut in September, causing the 30-year fixed-rate mortgage average to fall to 6.77 percent.

    As a result, contract signings across Manhattan and Brooklyn surged almost 34 percent year-over-year in July, with Brooklyn leading the way at a 54 percent increase and Manhattan following closely behind at a 29 percent increase. Miller believes this surge in July suggests there was more optimism about rates going lower over the next year or two, making a rate cut in September more tangible.

    While interest rates may not be as relevant in a city where over 60 percent of deals are done with cash, buyers' herd mentality can create a chain reaction. Once a few financed buyers start re-entering the market, the race is on, mortgages or not. Buyers are definitely coming out of the woodwork, as evidenced by the bidding war at The Huron, a new development in Greenpoint, where the broker recently turned multiple contracts into bidding war victories in the building.

    Griffith also reported a similar rush of interest at 415 Greenwich Street, an eight-story condo in Tribeca, where she had multiple bids on units 2F and 6H before converting one of the losing offers into a buyer on another H-line unit in the building.

    Despite this surge in demand, supply has been slow to catch up. In July, new listings rose just over 3 percent according to StreetEasy, a modest increase in the face of swelling demand. Sellers, who will also be buyers, should be encouraged to re-enter the market by more favorable mortgage rates. However, historically, inventory has lagged behind demand during runups, according to Realtor.com senior economist Ralph McLaughlin.

    Existing inventory will likely catch up faster because you don't have to build something new, McLaughlin explained. New supply takes a lot longer to catch up because supply is perpetually behind demand.