Manhattan Rents Hit New Record High As Peak Season Could Lead To Cooling In Fall

Manhattan apartment rents jumped again in July into uncharted territory as a combination of low supply, soaring interest rates, and increasing demand suggests leasing activity will stay strong through summer. 

Let’s revisit our housing note from mid-April, “Not A Peak” – Manhattan Apartment Rents Hit Another Record High that correctly pointed out how prices would soar this summer. 

Bloomberg reported, citing new data from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate, that the median rent on new leases last month was a whopping $4,150, up 2.5% from June and 29% from a year earlier.  

Median rents have smashed records in the past six months, even as listing inventory increased by 3.7% from June. The vacancy rate rose above 2% for the first time in seven months to 2.08%. Even as supply returns, about 20% of all new leases signed in the borough involved bidding wars, with some renters locking in contracts 13% over the asking price in July. 

“New York apartment costs began rising more than a year ago as the city, and Manhattan, in particular, rebounded from the depths of the pandemic. July’s prices were stoked by a pullback in homebuying and typical renting patterns that always make the summer an expensive time of year for Manhattan renters,” Bloomberg said. 

Jonathan Miller, president of Miller Samuel, said elevated mortgage rates push more people into rental markets during the peak rental season. He expects rent prices to reach another record high this month before possibly topping in fall when seasonal demand plateaus.

Even though both headline and core CPI inflation were softer than expected in July, Shelter costs continued to rise (+0.5% MoM). On the year, the shelter index rose 5.7%. 

And there is some good news. As we recently outlined, Apartment List data shows CPI shelter data should peak sometime in September or October. 

If you’re in the market for a new rental, perhaps wait until the fall when cooling should begin to get a better deal.