Luxury real estate sales in Manhattan are flat

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for the high-net-worth investor and consumer. subscription To receive future issues, directly to your inbox.

A month after a tax on second homes was passed in New York City, luxury real estate sales remain strong and inventory is declining, according to brokers and analysts.

When New York Gov. Kathy Hochul and the state Legislature approved the so-called land tax on May 27, real estate agents and developers expected an immediate impact. Brokers said wealthy New Yorkers would flee to Florida, developers said they would halt new projects, and real estate lobbyists predicted a decline in hiring. Many cited what they called the “Mamdani effect,” a reference to New York City Mayor Zahran Mamdani and the potential for wealth to escape from taxes.

“The tax on second homes will dampen market activity, reduce property values, harm new development and weaken the city’s economy,” the Real Estate Board of New York said in a statement shortly after the measure passed.

However, luxury apartment sales show few signs of weakness. 126 contracts were signed for apartments worth $4 million or more in June, up from 124 contracts during the same four-week period last year, according to Olshan Realty.

The median apartment price in Manhattan reached its second-highest level ever during the second quarter, rising 5% over the past year to about $2.2 million, according to Brown Harris Stevens. Sales of apartments priced between $10 million and $20 million rose 55%, according to Compass. The real estate brokerage said sales of apartments worth more than $20 million rose by 33%, with average asking prices rising by 14%.

Deals in June included an $80 million duplex penthouse in a new apartment building near Manhattan’s West Village, a $26 million condo downtown, and a $22 million co-op on the Upper East Side. While some buyers were initially spooked by the tax, the influx of cash from recent IPOs and rising wealth from asset prices outweighed their concerns, brokers say.

“The amount of money out there is crazy,” said Lauren Moss of Douglas Elliman, which had a $17.5 million residential listing going under contract in June. “We’re seeing big things coming at us every day. They’re getting stronger.”

It is of course too early to judge the long-term effects of the tax. Real estate lawyers say there will be years of lawsuits related to assessments, co-op boards, residency status and other issues related to the new tax. While Hochul and Mamdani said the tax would raise $500 million annually, the New York City comptroller estimates it would raise about $340 million to $380 million.

However, top brokers said tax concerns are quickly subsiding. The surcharge, imposed on nonessential residences valued at more than $1 million, was first proposed in April, approved in May and officially went into effect this week. It applies to housing that meets tax standards from January 5, 2026. So any buyers of expensive housing this year will be subject to the tax.

Some buyers initially paused their deals when the tax was first proposed, according to agents. He listed a $16.5 million duplex penthouse in the Madison Square Park Tower on April 8, said Scott Hostis, of Paradigm Advisory at Compass. One buyer expressed immediate interest and was about to make an offer, he said, but when Hochul announced the proposed tax a week later, the buyer backed out.

But by late May, as the details of the tax became clearer, buyers returned to the market. The shed contract was signed on June 6.

“There’s a lot of confidence there,” Hastis said. “Markets are strong. There are a lot of buyers in New York coming out of the woodwork.”

Hustis declined to comment on who would buy the $16.5 million penthouse or whether it would be a primary residence. If not, the condo would be subject to a tax bill of more than $98,000 this fiscal year, on top of property taxes, based on city assessments.

But Wealthy buyers are more interested in buying at the right time in the market cycle rather than paying an additional tax, Hostis said.

“Right now, they see that things are going into the contract and prices are not going down and they decide to implement,” he said.

Low inventory increases pressure on buyers. Luxury goods stocks are down 40% over the past year and are now at the lowest level they have seen since they began tracking them in 2004, said Jonathan Miller, CEO of valuation and research firm Miller Samuel.

Douglas Elliman’s Mark Palermo has a listing for a $19 million, 4,700-square-foot apartment at 565 Broome Street, a glass residential tower whose buyers have included tennis great Novak Djokovic. Uber Co-founder Travis Kalanick and President’s niece Mary Trump. In the fall of 2025 and early 2026, the listing attracted many offers at 20% or 25% below the asking price, Palermo said. However, the building remained steady on its price tag.

By late spring, as markets got over Iran war fears and the SpaceX IPO and other offerings created massive liquidity events, the Manhattan market came back to life, brokers said. Palermo said he received a “strong offer” for the $19 million apartment and was contacted at the end of June. While he declined to comment on the buyer, he said they already own a unit in the building and want to expand. Since the buyer is not a primary New York tax resident, they will likely owe land tax.

“People took a breath, settled into the new reality, and the smart people came in,” Palermo said.

Two other early bidders for the Broome Street listing also ended up closing on other apartments recently — one for a $15 million condo and the other for a $17 million condo, he said. All high-end buyers in Manhattan pay cash, no mortgages, he said.

Along with stock market gains and a boom in finance, the so-called Great Wealth Transfer is also increasing demand in Manhattan. Palermo said he does a number of high-end deals with buyers under 40, where the parents, family office or trust are the primary buyer.

“We see a lot of gifts coming from parents,” he said. “If you’re under 40 and you’re buying in New York City, you probably don’t make enough to buy for yourself.”