Manhattan is becoming a buyer’s market as apartment prices fell and inventory rose in the second quarter of 2024, according to new reports.

The average real estate sales price in Manhattan fell 3% to just more than $2 million, according to a report from Douglas Elliman and Miller Samuel. The median price fell 2% to $1.2 million, and prices for luxury apartments fell for the first time in more than a year, according to the report.

The price declines are a result of rising inventory of apartments for sale, which are also taking longer to sell. There are now more than 8,000 apartments for sale in Manhattan, which is higher than the 10-year average of about 7,000, according to Jonathan Miller, CEO of Miller Samuel, the appraisal and research firm.

Manhattan now has a 9.8 month supply of apartments for sale, which means it would take 9.8 months to sell all of the apartments on the market without any new listings, according to Brown Harris Stevens. “Any number over 6 months tells us there is too much supply and we are in a buyer’s market,” according to the Brown Harris Stevens report.

The falling prices and rising number of unsold apartments in Manhattan stand in contrast to the national real estate landscape, where continued tight supply continues to keep prices high. Brokers and real estate analysts say the strong prices in Manhattan post-Covid became unsustainable, and both buyers and sellers are finally capitulating to a higher interest rate environment.

“The buyers and sellers resolve is weakening,” Miller said. “At a certain point, they can only wait so long before they feel like they have to make a move.”

With the gap narrowing between buyer and seller expectations, more deals are closing. There were 2,609 sales in the second quarter, up 12% from a year ago, according to the Douglas Elliman and Miller Samuel report. That marked the first sales rebound in two years.

“As the second quarter began, New York’s real estate market awakened from the doldrums in which it had languished for the first quarter of 2024. Deals in all price categories began to emerge,” said Frederick Warburg Peters, President Emeritus of Coldwell Banker Warburg.

High rents in Manhattan are also continuing to help sales. The average apartment rental price in May was still upward of $5,100 a month and rents tend to rise in the late summer. Many potential buyers who were waiting out the sales market in rentals are finally deciding to buy, hoping interest rates will start to come down at the end of 2024 or early 2025.

“If people were sitting on the fence, the high rents maybe helped push them into the sales market,” Miller said.

Still, mortgage rates have a more muted effect on Manhattan real estate than the rest of the country since most Manhattan sales are in cash. In the second quarter, 62% of deals were all cash.

While prices fell for all segments of the Manhattan real estate market, the high end is among the weakest, as the wealthy hold off on purchases until after the uncertainty of the elections. The median sale prices in the luxury segment — or the top 10% of the market — fell 11% in the second quarter, according to Miller Samuel. Listing inventory of luxury apartments surged 22%.

“With the high end, this weakness could be the beginning of a trend or just a one-off,” Miller said. “We will have to see what happens in the second half.”