Manhattan’s real estate market closed the fourth quarter in a rare position of equilibrium — often described as a “Goldilocks market.” After much of 2025 was led by luxury-driven activity, momentum broadened toward the lower end of the market, creating healthier balance across price points.
Co-Op Sales Signal Renewed Buyer Confidence
One of the most notable shifts in Q4 was the resurgence of co-op sales, which outpaced condo transactions for the first time in more than a year. Co-ops, typically priced below condos, benefited directly from declining mortgage rates in the second half of the year. As borrowing costs eased, rate-sensitive buyers re-entered the market, increasing transaction volume without dramatically inflating prices.
This trend suggests pent-up demand among primary-residence buyers who had remained on the sidelines during periods of higher rates — a positive indicator for market stability moving into 2026.
Sales Activity Rises as Inventory Tightens
Closed sales across Manhattan increased year-over-year, while inventory moved in the opposite direction. Listings fell to their lowest levels since 2017, signaling that buyer demand continues to outpace new supply. This tightening was most pronounced in the luxury segment, where inventory dropped significantly after several quarters of strong absorption.
As high-end properties continue to sell faster than they are replenished, buyers may face increased competition at the top of the market, even as overall conditions remain balanced.
Pricing Holds Firm Without Overheating
Despite rising sales activity, median prices only edged higher, reinforcing the idea that Manhattan is not experiencing a speculative surge. Instead, the market reflects disciplined pricing, motivated sellers, and informed buyers — conditions that typically support sustainable growth rather than volatility.
Bidding wars increased modestly in Q4, reaching their highest share in three years, yet remain well below historical peaks. This points to a competitive, but not overheated, marketplace.
Cash Buyers Continue to Dominate
Even with mortgage rates trending lower, cash purchases accounted for a majority of transactions, particularly in the condo market. This underscores continued confidence among high-net-worth buyers and investors, many of whom remain insulated from rate fluctuations and are capitalizing on selective opportunities.
What This Means for 2026
Looking ahead, the combination of lower borrowing costs, shrinking inventory, and steady demand positions Manhattan for continued momentum into early 2026. If mortgage rates continue to decline, activity at the lower end of the market could further support overall sales volume, while limited luxury inventory may sustain pricing strength at the top.
In short, Manhattan’s housing market is neither overheating nor stalling — it’s functioning in a balanced, resilient state that favors informed buyers and sellers alike.
“Goldilocks market”: Manhattan’s sales market was “just right” in fourth quarter →
