Despite a relatively slow month, the luxury market performed moderately well in May, all things considered. New development sales in Manhattan and Brooklyn notably surpassed pre-pandemic levels. According to Marketproof, deal volume in the new development sector averaged 10 percent higher than the pre-pandemic average from 2015 to 2019. Total dollar volume increased by 18 percent, reaching $816 million.
In May, there were 54 new development luxury deals. Of these, 53 were in Manhattan, resulting in a 9 percent increase in contracts signed compared to the previous month. This amounted to a total of $670 million in dollar volume, marking a 28 percent jump. The remaining deal was in Brooklyn.
In the overall luxury market, contracts signed for co-ops priced at $4 million and up increased by 25 percent year-over-year, while contracts for condos priced at $5 million and up, rose by 13.2 percent. This helped offset the 59 percent year-over-year drop in contracts signed for luxury condos priced between $4 and $4.99 million. The net result was a slight 1.4 percent year-over-year decline in total luxury contracts signed in May.
The luxury market remains healthy, showing stability and moderate, positive gains. As the market normalizes to pre-pandemic levels, high mortgage rates are not affecting this segment significantly, if at all. This is largely because the luxury market predominantly consists of all-cash transactions, a well-known characteristic of this sector.
Globally, New York City ranked second in ultra-luxury home sales (priced at $10 million and up) with 56 sales in the first quarter of this year. Dubai led the market with 107 sales, totaling $1.7 billion. Palm Beach came in third with 47 ultra-luxury sales.
As we move into the third quarter, the luxury market shows promising signs of continued growth. The performance in May, particularly in new development sales and the resilience of high-value transactions, indicates a positive trend. With the market stabilizing to pre-pandemic levels and the predominance of all-cash transactions insulating it from high mortgage rates, the outlook remains optimistic. Globally, New York City's strong position in ultra-luxury sales further underscores the strength and resilience of this market segment. All signs point to a slowly but steadily improving luxury market as we advance through the year.