In October, resale prices in Brooklyn and Manhattan increased at their slowest pace in five years, likely heralding a softer-than-usual winter season for the New York housing market, according to the October 2016 StreetEasy Market Report released Wednesday.
Manhattan's median resale price increased 0.5% year-over-year to $982,042, the slowest annual growth rate since February 2011. Meanwhile, Brooklyn's median resale price increased 4% year-over-year to $566,283, the lowest appreciation since 2012, according to StreetEasy, a New York subsidiary of Zillow, a leading real estate and rental marketplace.
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"Approaching winter, high-end sellers are already cutting prices as they adjust to a more restrained market. Buyers looking in formerly ultra-competitive areas may find the ball is back in their court," said Krishna Rao, an economist at StreetEasy.
Another sign that the markets cooled: pending sales, or homes that went into contract, were down in both boroughs. In October, the number of pending sales dropped 16.2% year-over-year while 12.6% fewer homes went into contract in Brooklyn.
Upper End of the Market Continues to Soften
The luxury property market, which StreetEasy defines as the top 20% of the market, continued to soften. In October, the median resales price within the Manhattan luxury segment stood at $3,196,845, a 4.5% decrease from the same period last year. Compared to September, it was down 0.5%.
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Brooklyn, which has in recent years become more attractive to luxury buyers priced out of Manhattan, fared slightly better, with median resale prices increasing 2% year-over-year to $1,270,023.
"The Manhattan and Brooklyn sales markets are readjusting to a landscape where luxury inventory is no longer king. Price growth in Manhattan’s luxury market has been decelerating for some time now, but we’re seeing Brooklyn follow suit as prices there virtually didn’t budge last month at the top of the market," said Mr. Rao.
Submarkets Vary in Prices Increase
Most of Manhattan’s submarkets recorded about a 1% increase in median resale prices, with upper Manhattan reporting the highest rate, at 3.2%. Large parts of Brooklyn saw an over 4% increase in October.
| Manhattan Submarkets in October | ||
| Area | Median Resale Price | YOY Change |
| All Manhattan | $982,042 | +0.5% |
| Downtown | $1,197,844 | -1.8% |
| Midtown | $861,582 | +1.7% |
| Upper West Side | $1,068,907 | +1.0% |
| Upper East Side | $997,796 | +1.0% |
| Upper Manhattan | $618,367 | +3.2% |
| Brooklyn Submarkets in October | ||
| Area | Median Resale Price | YOY Change |
| All Brooklyn | $566,283 | +4.0% |
| North Brooklyn | $864,969 | -1.2% |
| Northwest Brooklyn | $854,868 | +4.3% |
| Prospect Park | $800,906 | +4.9% |
| South Brooklyn | $426,633 | +5.5% |
| East Brooklyn | $490,597 | +5.2% |
| Source: StreetEasy |
Most notably, North Brooklyn and downtown Manhattan, two of the hottest New York areas where strong demand for luxury homes pushed prices higher earlier this year, both saw a price decline in October, according to the report.
Resale prices in Manhattan's downtown submarket, which is the borough's most expensive, declined 1.8% year-over-year to $1,197,844. Resale prices in North Brooklyn, comprised of Williamsburg, East Williamsburg and Greenpoint fell 1.2% year-over-year to $864,969 in October.
L-train Shutdown May Affect Williamsburg
In other signs of waning competition, the North Brooklyn submarket had the highest share of price cuts among all other submarkets at 44.3%. Sellers received 92% of their asking prices, down from 99.6 percent in October of last year.
Homes in the area also took longer to go into contract compared to this time last year, with median time on the market increasing from 35 days to 88 days, more than double the median of any other Brooklyn submarket. Homes in Williamsburg, in particular, took a median of 90 days to go into contract.
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"In Williamsburg, it will be particularly interesting to see if price declines continue as the L-train closure approaches. For those who don't mind dealing with restricted transit options over the next few years, this could present an opportunity for investment that will ultimately pay off," said Mr. Rao.
The L train, running from 14th Street in Manhattan to Canarsie-Rockaway Parkway in Brooklyn, is the main mode of transportation for Williamsburg residents. During Superstorm Sandy in 2012, the 100-year-old Canarsie Tunnel under the East River was flooded. In response, the MTA, which runs public transportation in the state, announced it would need to shut down the L train for 18 months beginning as early as January 2019 to make critical repairs.
Write to Fang Block at fang.block@dowjones.com