Similar to April, the month of May is one of the key months from a data point of view in the residential market. The main market reports to summarize the spring market won’t be out until another month but here is a quick rundown of what the reports will be saying. Inventory on the market is the best measure of supply while contracts signed is the best measure of demand.
1. Inventory continues to increase at an astounding rate. May saw over 2300 apartments hit the market in Manhattan, which serves as the third consecutive month that the amount of new monthly supply hit a record for this decade. Based upon past trends, this monthly high should stand until at least the fall as inventory should begin to diminish in June as the heavy majority of new spring listings have already been placed onto the market while other listings are taken off the market for the summer
2. The overall amount of contracts being signed for May is in line when compared to the month of May in 2015, 2016 and 2017. Deals are still getting done similar to past years but the amount of listings not selling continues to rise which makes pricing conservatively key in this market. With so much inventory on the market, buyers have plenty of options and with many properties experiencing very slow open house traffic.
3. Contracts signed per inventory came in at 16.3% for the past month, which is almost half of what it was back in May 2013 when this number was hovering around 32%. This number helps to show the leverage shift in the market towards buyers.
4. The condo $10 million plus market had another favorable month when compared to one year ago. Twenty-two contracts were signed in this group, which is the highest amount since May of 2016. The condo market overall this spring compares very similarly to the 2017 spring market.
5. In the co-op market, the amount of contracts being signed/per inventory on the market had a better month compared to April but the numbers show a clear pendulum shift towards buyers when compared to previous springs. Every price point for co-op’s is showing a high for inventory in May when compared to any month within the past five years.
6. A lot of neighborhoods continue to show big inventory gains with similar or decreased amount of contracts singed compared to a year ago. A focal point in the inventory chart below is the amount of co-op listings available at the less than one million price point compared to one year ago in many neighborhoods.
In conclusion, prices have nowhere to go but down without the surge in demand to match the increased supply. Furthermore, with rates expected to rise in the second half of the year, demand that is shown in contracts signed risks further year over year declines.