Manhattan apartment prices drifted slightly lower in the third quarter from peak levels set earlier in the year amid signs of a slowdown in deal-making over the summer. Brokers and analysts attribute the decline in part to uncertainty about the world economy, especially after a volatile August in U.S. and Chinese financial markets. An analysis by The Wall Street Journal found that the median apartment price during the third quarter through Sept. 21 was $950,000, about 3% below the median price during the second quarter, a record high. The number of closed sales during the third quarter rose to the highest pace in two years, reflecting strong deal making earlier in the year. But beginning in June, the number of apartments and townhouses with signed contracts listed by brokerage firms lagged below that signed a year earlier, according to real-estate data website UrbanDigs.com. In August, it found the number of contracts signed down 16.8% from a year earlier, the slowest August since 2010. Another analysis, by the Corcoran Group, found the number of contracts signed in August fell 6% from August 2014, the lowest August performance Corcoran had recorded since 2011. The figures include proprietary data on contracts signed on some new developments, a spokeswoman said.
“The leverage has shifted a few notches toward the buy side,” said Noah Rosenblatt, a broker and chief executive of UrbanDigs.com. “We are in the midst of a slight adjustment down in price, but I don’t think it is anything sizable at the moment.” He said the market was returning to normal, nudged by a “recent rise in volatility and uncertainty over the last two months” after having strongly favored sellers over buyers during the previous year. He said he expects some international buyers—especially from China, who helped push the market upward in recent months—to pause and reassess how to “deploy their capital.” Leonard Steinberg, president of Compass, a brokerage firm based in New York City, confirmed the slowdown in deals, but said he expects to see sales pick up later this year.
While real-estate sales usually slow in the summer, “this summer we have quite a number of distractions”—including especially nice weather that may have kept buyers away. He also cited worries about a slowing Chinese economy and a faltering U.S. stock market that helped slow sales. “When everyone in New York keeps talking about Chinese buyers, when there is volatility, there is going to be a moment when people take a pause,” he said. But he added the outlook is still good for the luxury Manhattan market. “The economy in the U.S. is quite strong,” he said. “The wealth creation is extraordinary, especially among the wealthier.” Manhattan apartment contracts often take months to close, especially for cooperatives, where many deals have to go through a long approval process set out by co-op boards. In Manhattan, 57% of all apartment sales are co-ops. So during the third quarter, when recorded co-op and condo sales were up 11.6% from the same quarter in 2014, that sales pace reflected contract activity earlier in the year. During the third quarter, The Wall Street Journal analysis showed that the median condo price rose to a record $1.475 million, up 13.5% from the same quarter in 2014, while the median co-op price of $730,000 was up 4.3% from a year earlier but down 4% from the second quarter. The analysis is based on closed sales filed with the New York City Department of Finance as of Sept. 21. Despite the strong showing in the third quarter, there were no record-breaking sales of new condominiums or pedigreed co-ops on Fifth or Park Avenues. Instead, the highest third-quarter sale filed so far was the $37.9 million sale of a four-level penthouse at a new 32-story condominium known as the Charles on First Avenue off East 72nd Street, outside the boundaries of what are considered elite blocks. The apartment has 12 bedrooms, 12½ baths and two terraces, according to the brokers, Ginger Brokaw and Jason Karadus of Town Residential. The second-highest sale was $30 million for a co-op at 1040 Fifth Ave., on the corner of East 85th Street. Write to Josh Barbanel at josh.barbanel@wsj.com This article originally appeared on The Wall Street Journal.