NYC Rents Dip Again As More Tenants Reenter Homebuying Market

New York rents are coming down as more supply comes to the market and demand slips.

In August, new leases in Manhattan surged 64% year-over-year while inventory nearly doubled. Meanwhile, median rental prices fell almost 4% from last year, the third decline in the last four months, according to Douglas Elliman’s monthly rental report, compiled by Miller Samuel.

“The market's still tight, but we're not at record levels,” Miller Samuel CEO Jonathan Miller said. “The narrative that seems to lay in front of us through the fall, through the end of the year, is that weaker rents are in front of us, and this is the first step.”

Miller said that is largely because the buyer's market is becoming more accessible.

During the pandemic, the housing market heated up as renters, feeling cramped in quarantine and free to work from anywhere, were handed all-time-low mortgage rates. Over time, the demand caused housing costs to surge. 

Eventually, mortgage rates rose and inventory dwindled, locking homeowners into so-called golden handcuffs, preventing them from moving. Those same factors forced would-be homebuyers to rent, driving apartment rents to all-time highs and vacancy down to historic lows.

Manhattan rents repeatedly shattered records over the past couple of years. The median rent stands at $4,245 this month. Before the pandemic, in August 2019, the median rental price was $3,500. 

But for the last two months, signed home contracts have again jumped, Miller said. In August, new signed contracts for Manhattan condos increased 42% year-over-year, while those for co-ops were up 21%, according to another report by Douglas Elliman.

“That's not an insignificant jump,” Miller said.

Mortgage rates have been moving downward since early July, when the 30-year, fixed-rate mortgage was 7%. For the week ending Sept. 6, it dropped to 6.3%, the lowest rate measured by the Mortgage Brokers Association since February 2023.

Some buyers have gotten into the game early, expecting home prices, as well as competition, to increase once the Federal Reserve reduces interest rates. That is widely expected to happen at the Fed's meeting next week.

Still, mortgage rates won't drop automatically, though they are informed by the Fed’s decision. The pure excitement surrounding potential cuts could lead to a more robust buyer's market — and more relief for renters.

“I'm not saying that this signals some sort of boom in the fall, but I do think that it's going to help normalize activity,” Miller said. “That's based purely on the assumption that people have been waiting about two and a half years.”