After a challenging 2020, First Quarter 2021 gave Manhattan’s buyers and sellers some much-needed confidence and optimism. This quarter, despite the pandemic, closings and signed contracts climbed as prices cooled and inventory moderated. Better value, low interest rates, the vaccine rollout, and a recovering economy are powering the market’s improvement. After years of stops and starts plus the historic lows of 2020, the road to full health will take time, but we are hopeful that the market’s recent performance indicates that demand for Manhattan real estate has finally turned the corner and begun to earnestly recover.

Sales improved significantly in First Quarter 2021. Closings increased on a quarterly and annual basis for the first time in a year, climbing 23% versus last quarter and 7% versus last year to over 2,600 sales—the best first quarter for closings since 2017. Those gains were fueled by the robust contract activity seen in Manhattan since Labor Day, a trend that’s strengthened so far this year. In First Quarter 2021, contracts signed skyrocketed 58% annually to just over 3,700 deals, the strongest start to any year for signed contracts since 2007, even beating out 2013 by 6%.

Although sales are rebounding, inventory remains high. As of mid-March, there were 7,973 active listings in Manhattan, up 14% annually. As is typical for this time of year, over 4,000 new listings hit the market in First Quarter 2021, but inventory growth moderated versus last quarter thanks to healthy deal activity. Listed inventory is now 23% below its October 2020 post-Covid peak of nearly 10,500 units. Notably, with the spring market upon us, inventory could bounce higher in the future as sellers seek to take advantage of the improving market conditions, buyers list their existing homes in order to move, and more new developments launch for sales.

Many factors have been key to the emerging, positive changes in the market, yet none are likely more significant than lower prices. In First Quarter 2021, median price declined 3% to $1.050M and average price per square foot dropped 12% to a seven-and-a-half-year low of $1,524. Prices fell because of a sharp drop-off in new development sales, strong activity under $2M, and buyers’ ongoing prioritization of space over location or building. With few exceptions, almost every product type, bedroom count, and neighborhood saw price statistics fall year-over-year.

First Quarter 2021 was a record-setting quarter in Brooklyn on several fronts. The number of deals surged and many price statistics were at or near all-time highs. Coming just one year since New York’s stay-at-home order began, the strength and velocity of the market rebound are truly remarkable.

First Quarter 2021 had the highest number of sales for any quarter since 2007. Over 1,800 apartments closed in the first three months of the year. Buyers pounced on the opportunity to choose from over 2,600 listings, the most they had seen in a decade. Given high inventory levels, apartments spent a little over three months on the market, only slightly less time than a year ago. Still-low interest rates and the fear of them rising helped motivate over 1,400 buyers into contract, the highest number of deals inked since Second Quarter 2015.

Median price reached nearly $800,000, jumping 20% to set a new record, while average price of $947,000 was just a few dollars shy of the record set back in early 2017. No other quarter on record had more sales over $1M than First Quarter 2021. The convergence of pent-up demand, increased purchasing power, and a desire for more space translated notably into the market for large residences, as both the number and market share of three-plus-bedroom sales reached a record high. Average price per square foot, on the other hand, did not reach a record high, increasing 3% year-over-year and underscoring that the nominal price growth was more the result of larger residences selling as opposed to broader market appreciation