Manhattan’s residential real estate market picked up a bit of steam in the first quarter as low interest rates continued to lure entry-level buyers.
But prices dropped as luxury sales tapered off following a burst of activity at year-end, when buyers and sellers rushed to avoid a bigger tax bite, according to a report by Halstead Property released on Tuesday.
The average price of a Manhattan home fell 16% from the first quarter of 2012, to $1.25 million, the report showed.
“Everyone who could possibly close by the end of the year did so because of the pending tax law changes,” Diane Ramirez, president of Halstead Property, told the Daily News.
Still, the median price, which captures the middle of the market, fell only 5%, and closings were up 3% over a year ago, Halstead said.
“We’re in a very strong market,” Ramirez said, calling the average price drop an “aberration.”
“When you see sales are up, that’s really the true barometer.”
A dearth of homes on the market will continue to underpin Manhattan home prices going forward, said Jonathan Miller, CEO of appraisal firm Miller Samuel, which compiles reports for Douglas Elliman.
Manhattan inventory slumped 34% in the first quarter from the year-earlier period, the biggest year-over-year decline in at least 12 years, the Douglas Elliman report showed.
Sellers are still waiting for higher prices and tight credit conditions make it hard for wannabe buyers to trade up, Miller told the News.
New construction is coming down the pipeline but will mostly feed demand at the higher end of the market, he said.
“We’re going to see upward pressure on prices for the better part of this year because there’s no relief in sight for supply,” Miller said.
Demand for new luxury construction was particularly strong in the first quarter, driving the median price for a newly built home up 37%, according to a separate report by Corcoran.
“Buyers are once again purchasing homes based on floor plans,” Corcoran CEO Pamela Liebman said in the report.