Pending home sales in Manhattan spiked 27% in April from a year ago, reaching the highest level of signed contracts since the spring of 2015, as property prices in America’s costliest urban neighborhood dropped, according to StreetEasy.
After New Yorkers snapped up properties, the inventory of homes declined 10% in April compared to a year ago. The StreetEasy Manhattan Price Index fell 5.2% from last April — down by $60,096 to $1.1 million, the lowest level since May 2015.
“Early signs tell us that some sellers are finally pricing their homes more realistically and finding buyers when they do,” said StreetEasy Senior Economist Grant Long. “April brought some good news to those who have feared a continued slide in the sales market.”
Sellers of high-priced homes in areas that have hefty property taxes have been hard-hit by the new federal tax code that went into effect last year. The tax code approved by Congress in the closing days of 2017 capped state and local tax deductions – known as SALT – at $10,000. That had an outsized impact on some housing markets in states like New York, New Jersey, Connecticut and California that have high-priced real estate coupled with hefty property taxes that support schools and local services.
"Sixteen months into the change, the highest price points of some of the highest-priced housing markets may suffer as real estate is re-priced to reflect the change in the cost of owning,” Odeta Kushi, Deputy Chief Economist at First American, wrote in a report earlier this month. Nationally, "the tax changes have had virtually no impact to the housing market," the report said.
The median price of a home in Manhattan was $1.08 million in the first quarter, down 0.2% from a year earlier, according to New York appraisal firm Miller Samuel. That’s more than four times the national median price of $254,800 in the first quarter, as measured by the National Association of Realtors.
“The tax law is forcing buyers and sellers to recalibrate what value is,” said Jonathan Miller, president of Miller Samuel. “I do feel like there has been an overreaction to the tax law, and that the market will eventually digest the change.”