The Fed Cuts Rates by 0.5% – A Positive Shift for Buyers

The Federal Reserve announced a long-awaited rate cut, cutting rates by 50 rather than 25 basis points. This rate reduction is the first in four years and the most significant reduction since 2008. While this decrease won’t immediately lower mortgage rates, as the market had already priced in much of this initial rate cut, it is a key signal of additional rate cuts on the horizon. This sets the stage for a gradual decline in mortgage rates in the near term.

This development is encouraging for buyers who have been sidelined by high rates and for current homeowners who have hesitated to sell due to the “lock-in effect”—the reluctance to trade properties because their existing mortgage rate is significantly lower than current market offerings.

As summer wrapped up, buyer demand was already picking up, and with the improved rate environment, this momentum is expected to accelerate. For buyers who are financially prepared and find a suitable property, now may be an opportune time to act. The ability to refinance later as rates continue to decline provides a distinct advantage, giving today’s buyers a strategic edge. Those waiting until 2025 for lower rates, election outcomes, or more economic certainty could encounter a more competitive—and potentially pricier—market as demand increases.

For sellers, those with a need to sell in the near term should price their homes competitively and list them as soon as possible to capitalize on the active fall market. Sellers with more flexibility may benefit from waiting until late winter or spring 2025, when we anticipate stronger market activity, driven in part by falling mortgage rates and heightened buyer competition.

The Elegran | Forbes Global Properties Consumer Sentiment Index increased from +9 to +13.

Manhattan Supply

The number of available properties in Manhattan grew by 3.8% this week, bringing the total to 6,622 units for sale as 461 new listings hit the market. While this week’s new inventory aligns with last year’s levels, it is still 20% lower than what we saw during the same week in 2019. As a result, supply remains somewhat constrained, with overall inventory down roughly 2% compared to this time last year.

Brooklyn Supply

Brooklyn now has 3,406 apartments available for sale, marking a 3.3% increase from last week. The influx of new listings is notably higher than in previous years—40% more than the same week last year, and 71% more than in 2019. This surge in new supply has led to a year-over-year increase in Brooklyn’s inventory, in contrast to Manhattan. Total supply in Brooklyn is currently 11% higher than at this time last year.

Manhattan Pending Sales: Pending sales declined by nearly -4% to 2,668 units. 

Brooklyn Pending Sales: Pending sales declined by nearly -4% to 1,697 units. 

Manhattan Consumer Sentiment

Contract activity in Manhattan saw a small uptick this week, with 170 contracts signed—a 1% increase from the previous week. This steady rise in activity suggests that the upward trend will likely continue through the remainder of September. The Elegran | Forbes Global Properties Manhattan Consumer Sentiment Index also improved, moving from -6 to -4, though it has remained in negative territory for the past four weeks. Notably, contract activity was 32% higher than the same week last year and 27% higher than the same period in 2019 and the recent 50 basis point rate cut is expected to further boost demand, as buyers look to take advantage of declining interest rates.

Brooklyn Consumer Sentiment

Unlike Manhattan, Brooklyn’s residential real estate market experienced a dip in contract activity this week, with a 6.4% decrease compared to the previous week, totaling 102 signed contracts. However, this still marks a 4% increase over the same period last year and a 12% rise compared to 2019. Given the week-over-week decline, the Elegran | Forbes Global Properties Brooklyn Consumer Sentiment Index dropped from +51 to +42. Looking ahead, the recent decline in interest rates is expected to alleviate some of the current headwinds and potentially drive increased demand in the borough.

New Development Insights 

Marketproof reported that 58 new development contracts were signed in 42 buildings this week. The following buildings were the top-selling new developments of the week:

• Monogram New York (Turtle Bay) signed 4 contracts

• Claremont Hall (Morningside Heights) and Brooklyn Point (Downtown Brooklyn) each signed 3 contracts.