July 2025

July Newsletter —

Temperatures are high as we enter Q3 2024, but what about the temperature of the NYC real estate market? In this month's newsletter, we delve into the Q2 2025 update, discuss the latest real estate news, and more.

Sales Market Update

The NYC sales market continued to show resilience in Q2 2025, despite high mortgage rates, economic uncertainty, and a decline in new listings. Both Manhattan and Brooklyn posted modest gains in closed sales, with strength in the luxury segment and a steady pace of activity when homes were priced appropriately.

In Manhattan, closed sales rose 5.2% year over year and 14.5% from Q1. The ultra-luxury market drove much of this growth, with closings in the $10M and above range up 66.7%. Many of these buyers, often relocating from California or Florida, were drawn to high-end properties that offer long-term value and premium amenities. Condo sales outpaced co-ops, rising 13.7% year over year, while co-ops faced slower demand due to lengthier board processes and stricter policies. Still, they continued to offer attractive value in specific segments.

Contract activity dipped 4.9% compared to last year, largely due to a slowdown in co-op deals. However, condos priced between $3M and $5M saw an 18.4% increase in signed contracts, as new-generation buyers looked to upsize. Inventory reached just under 6,700 listings, up 4.4% from the same time last year, but new listings fell 14.1% as many homeowners remained locked into favorable mortgage rates and reluctant to list.

Brooklyn also posted gains, with 2,468 closings, a 2.1% increase from last year and a 4.7% gain from Q1. Luxury sales led the way, with closings in the $2M to $3M and $3M and above categories up 36.2% and 34.3%​ year over year, respectively. House prices also rose, with average and median prices increasing 7.1% and 6.6%.

Co-ops showed surprising strength, with a 12.5% increase in sales ​year over year and a 42.1% jump in median price, particularly in Northwest Brooklyn. However, a sharp drop in new listings contributed to a 36.1% decline in signed contracts. Condos saw a 6.7% decline in closed sales, but the $500K to $1M segment remained competitive, with a 3.8% increase in closings and stable pricing.

Inventory in Brooklyn rose 3.6% year over year to nearly 3,400 listings, but new supply remains limited. New listings fell 6.5% for houses and 3.3% for condos, as many owners continue to hold onto low mortgage rates.

Looking ahead, market sentiment is being shaped by a mix of economic expectations, geopolitical events, and local politics. Rising tensions following the Israel-Iran conflict and uncertainty surrounding New York City’s upcoming mayoral race have prompted some buyers to take a more cautious approach. In Manhattan, this shift became evident in June. While the month started in line with last year​, with 415 contracts signed between June 1 and 13, nearly identical to the 416 signed during the same period in 2024​, the second half of the month saw a sharp drop in activity​, coinciding with heightened international tensions and broader political uncertainty. These events may have caused some buyers to pause or delay decisions, particularly in the higher price points. Still, the long-term fundamentals of the NYC market remain intact. Limited supply, global relevance, and strong lifestyle-driven demand continue to support steady momentum across boroughs.

Let's take a closer look at the statistics from Manhattan and Brooklyn.

+1.8%

Quarter-Over-Quarter

+2.5%

Year-Over-Year

+18.1%

Quarter-Over-Quarter

-4.9%

Year-Over-Year

Days on Market (Q2 2025)

208

Average DOM

28.0%

Properties in Contract

after 180+ DOM

Inventory

+8.8%

Quarter-Over-Quarter

+4.4%

Year-Over-Year

Source: Compass Q2 2025 Manhattan Market Report

-2.7%

Condos

+11.7%

Co-ops

-

Houses

Contracts Signed (Quarter-Over-Quarter)

+5.3%

Condos

+48.3%

Co-ops

+18.5%

Houses

Days on Market (Q2 2025)

141

Average DOM

(Overall)

+18.0%

Properties in Contract

after 180+ DOM

Inventory (Quarter-Over-Quarter)

+16.7%

Condos

+10.2%

Co-ops

+21.5%

Houses

Source: Compass Q2 2025 Brooklyn Market Report

Rental Market Update

New York City’s rental market hit another milestone in June, with Manhattan’s median rent climbing to a record $4,625, marking the fourth new high in five months. About one in four Manhattan renters paid above asking price, driven by intense competition and bidding wars.

The recently enacted FARE Act, which took effect on June 11, is reshaping the market. The law requires landlords​, not tenants​, to pay broker fees when the broker represents the landlord. Early signs suggest landlords are raising rents on new leases to offset this cost.

In Brooklyn, the average rent per square foot hit a record for the fifth time in six months. Median rent rose to $3,733, and nearly one in three renters signed leases above asking. Listings and lease activity have remained strong for the past 18 months.

Queens saw the largest listing surge, up 34.1% compared to last year. Median rent in Northwest Queens reached $3,600, with nearly one in four renters paying above asking.

Read the Compass June 2025 Rental Report here.

Deep Dive: One Big Beautiful Bill

Earlier this year, the federal government passed the One Big Beautiful Bill, a sweeping $1.5 trillion infrastructure and housing package aimed at revitalizing the country’s physical and economic foundations. With billions earmarked for transit, housing, energy efficiency, and zoning reform, the bill is poised to shape the real estate market across the country. In New York City, where housing policy and infrastructure are tightly linked, the impact may be particularly significant.

One of the most closely watched components of the bill is its support for office-to-residential conversions. With Manhattan office vacancy rates hovering near record ​highs (around 16​%) and post-pandemic shifts in how and where people work, the city has been urgently looking for ways to repurpose underused commercial buildings. The bill expands federal tax credits and financing options for projects that convert outdated office towers into housing, especially when a portion of the new units are designated as affordable housing. This builds on local efforts like New York’s 467-m program, which offers generous tax abatements to developers who commit to affordability and meet construction deadlines.

As a result, the pipeline of conversions is growing rapidly. An estimated 8.3 million square feet of office space is already slated for conversion, with major projects like 25 Water Street and 40 Exchange Place leading the way. While high construction costs remain a ​hurdle, often ranging from $250 to $650 per square foot​, federal funding and incentives are helping to make these projects viable. According to The New York Post, city-backed initiatives have made conversions “finally pencil out,” even as owners navigate new rent-stabilization requirements tied to the program.

In addition to conversions, the bill also targets transit and infrastructure upgrades, a critical factor in real estate values across New York’s five boroughs. Projects like the Gateway Tunnel, Penn Station redevelopment, and the Second Avenue Subway extension stand to benefit from federal funding, and history shows that improved transit access typically correlates with higher property values. A study by the Brookings Institution found that home prices near major transit upgrades increase by an average of 8 to 12​% over five years.

Zoning and housing supply are another key focus. While the bill doesn’t override local control, it provides financial incentives to municipalities that ease zoning restrictions and promote higher-density development near job centers and public transportation. In NYC, this complements recent rezoning efforts, including the Bronx redevelopment plan, and aligns with the city’s “City of Yes” initiative to streamline development approvals and create more housing across the income spectrum.

Energy efficiency is also a major theme. The bill allocates nearly $50 billion for building upgrades and climate-resilient construction. This could benefit NYC owners of older housing stock, particularly co-op and condo boards facing Local Law 97 deadlines. Expect to see expanded rebates and financing tools for retrofitting buildings with modern systems, helping reduce long-term operating costs and carbon emissions.

For buyers, sellers, and investors, the implications of the bill will unfold gradually, but the direction is clear. For buyers and renters, the bill’s focus on increasing housing supply and improving transit may expand the range of livable, connected neighborhoods. For sellers and property owners, buildings located near upgraded transit lines or in areas eligible for conversion or rezoning could see a boost in value. And for developers, the combination of tax credits, federal funds, and local incentives makes mixed-use and affordable projects more attractive, especially if acquired at favorable pricing.

The long-term success of the bill depends heavily on local implementation, but NYC is well-positioned to benefit. With strong demand for housing, aging infrastructure, and a mayoral administration focused on increasing supply, many of the bill’s provisions align with the city’s real estate priorities.

That said, future political leadership could shift the city’s trajectory. The recent Democratic primary win by Assembly​ member Zohran Mamdani​, who is campaigning on expanding tenant protections and freezing rents on all rent-stabilized units​, has raised questions about how office-to-residential conversions might proceed. While conversions are new construction and not directly subject to rent freezes, they typically require developers to designate 25% of the units as rent-stabilized in exchange for tax benefits. Under current rules, those units fall under the city’s Rent Guidelines Board, which sets allowable increases. A rent freeze could reduce expected returns and affect resale values, especially for projects targeting institutional investors.

Though the mayoral race is still months away, the policy direction of the next administration could significantly influence how​, and how quickly​, the bill is implemented in New York. For now, incentives remain strong, interest is still high, and conversions are moving forward. But developers and investors will be watching the political landscape closely in the months to come.

For a closer look at how the bill supports conversions in NYC, check out this recent Wall Street Journal article. And for a breakdown of tax and zoning incentives, Propel Estate Agency offers a helpful guide.

While the effects won’t be immediate, the bill sets the stage for meaningful shifts in how and where New Yorkers live, work, and invest, especially over the next five to ten years.

City Spotlight: Commentary on The Commute:

A Century of The New Yorker's Transportation Cartoons

Transit, humor, and history converge in Commentary on the Commute: A Century of The New Yorker’s Transportation Cartoons, now on view at the New York Transit Museum’s Grand Central outpost. Featuring works by 57 artists spanning 100 years, the free exhibit highlights everything from packed trains and nosy commuters to critters, trolleys, and Grand Central’s grandeur. It’s a witty tribute to the shared experience of getting around the city, and to The New Yorker, which has been capturing it since 1925. The exhibit is open daily through October 26.

Click here for more information.

Just Closed

Upper East Side

1165 5th Avenue, Unit 2/3D

4 BD 3 BA 2,200 SF $2,250,000

Rarely available and on the market for the first time in over 40 years, this unique, house-like apartment is filled with natural light thanks to direct southern and eastern exposures.

305 East 40th Street, Unit 5K

2 BD 2 BA $5,800

Bright and airy with southern and eastern exposures, this fully renovated home features an in-unit washer/dryer, abundant closet space, and solid oak floors throughout.

Coming Soon

West village

Renovated One-Bedroom

Spacious and fully renovated, this one-bedroom home is located in the heart of the West Village. It offers excellent light, abundant closet space, and an open kitchen, all in a full-service building with a stunning roof deck.

upper east side

Convertible Three-Bedroom with

East River Views

This bright, 1,650 SF home features an enclosed terrace and sweeping East River views from both bedrooms and the expansive living room. Currently configured as a two-bedroom with two full baths and a dining room, it offers abundant closet space and flexible layout options, all in a full-service building on a quiet cul-de-sac block.

nomad

Fully Renovated

Two-Bedroom

This luxurious east-facing split two-bedroom, two-and-a-half-bathroom home features oversized windows with open views, ceilings over 10 feet high, an in-unit washer/dryer, a separate office area, and central AC, all a building with more than 10,000 square feet of amenities.

Upper east side

Pre-War One-Bedroom

This charming prewar one-bedroom is quiet, with windows in every room and access to a range of building amenities, including a common courtyard, laundry facilities, bike storage, and a children’s playroom.

In Contract

Upper East Side

131 East 81st Street, Unit PH15

2 BD 2 BA 1,075 SF $1,495,000

Welcome to PH15, a private full-floor corner penthouse in the heart of the Upper East Side. This light-filled home offers two balconies, private elevator entry, in-unit washer/dryer, a custom LEICHT kitchen, 1.5 baths, and skylights throughout, including one in the en-suite bath with heated floors.

100 West 93rd Street, Unit 5K

IN CONTRACT ABOVE ASK

This large, south-facing one-bedroom home features an in-unit washer/dryer, a separate dining area, hardwood floors throughout, abundant closet space, and a premier location just steps from Central Park and right above Trader Joe's.

7 West 92nd Street, Unit 76

2 BD 1 BA $900,000

This top floor, fully renovated two-bedroom home is ideally located just steps from Central Park. With 9’ ceilings, an in-unit washer/dryer, three exposures with windows in every room, and charming details like exposed brick and a decorative fireplace, this home is not to be missed.

Most Recent Mortgage Rates

Rates are from Citibank and are effective as of 7/28/2025. Rates are subject to change without notice.

Everyone’s mortgage needs are different. I have great relationships with mortgage brokers and loan officers from big banks and small banks who can help find the best loan for you. If you're looking for a lender you can trust, I'd love to help. Email me for more.

Rebecca's Resources

I'm an expert at successfully repositioning and selling homes that were previously listed without success. Click here for examples of how I have transformed listings to showcase a property's full potential, securing favorable deals where other agents could not.

Find out how Compass Concierge can help you prepare your home before coming to market by fronting the costs of upgrading, renovating, and staging at no interest.

I'm born and raised in New York City. If you've got a question, I've got you covered. For recommendations on anything, from the best rooftop happy hours to the best iced coffee, it's as simple as sending me an email.

Licensed Associate Real Estate Broker

M: 917.952.0414

rebecca.orbach@compass.com