Lease signings fell in August as lower mortgage rates draw buyers out of the rental market

Rents for new leases in New York City surged again last month even as demand for new rentals dropped—a sign that some renters are making a move into the sales market thanks to lower mortgage rates.

Manhattan median rent in August was higher year-over-year, but it didn’t set a new record, unlike the past five out of six months, according to the latest edition of the Elliman Report for Manhattan, Brooklyn, and Queens rental markets. Median rent hit $4,600, an increase of 8.4 percent over August 2024. Average rent per square foot did reach a new high of $91.07

Listings were down year over year for the second time, which Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report, attributed to the impact of the Fare Act.

New leases declined annually for the second time, as “falling mortgage rates poached rental demand,” Miller wrote in the report.

The average 30-year mortgage fell to 6.29 percent, down .25 percent from a week ago and the first time the average rate for this loan has been below 6.3 percent since early October.

The rate can be even lower for some buyers—and will likely drop more in the future, easing some competition for rentals.

As Melissa Cohn, regional vice president of William Raveis Mortgage, noted in a recent edition of her newsletter The Mortgage Monthly: “For borrowers with good credit and a healthy down payment, that rate can be as low as 5.99 percent with 0 points. It has been a very long time since I have quoted a 30-year fixed below 6 percent.”

She said the decline in rates can be attributed in part to “ongoing and growing weakness in the employment sector.” The Federal Reserve will very likely announce a rate cut of .25 percent next week, she said, with two additional cuts expected by the end of the year.

“A rate below 6 percent should help to bring new buyers into the marketplace,” she wrote.

Bidding wars for one in three new rentals in Brooklyn

In Brooklyn, median rent jumped to the highest on record, climbing 8.2 percent to $3,950 over August 2024. Bidding wars were involved in one-third of new rentals last month, according to the Elliman Report.

Listings were down for the second time, a drop of 16.3 percent from a year ago. New lease signings fell 8.1 percent from the same time period.

Queens listings increase for the 19th time

All rent metrics for Queens rose year over year last month, and median rent has increased every month this year, the Elliman Report noted. In August, Queens median rent rose 6.6 percent to $3,775.

More than one out of four new leases involved bidding wars, the second-highest share since tracking by the Elliman Report began in early 2021.

Listings increased annually for the 19th time with a 10.4 percent uptick however new lease signings were down 6.3 percent.

Manhattan market ‘cooled slightly’

The Corcoran Group also released Manhattan and Brooklyn rental market reports.

Gary Malin, COO of Corcoran, said, “Manhattan’s rental market cooled slightly in August, with leasing activity falling both month-over-month and year-over-year to its lowest August level in five years. Yet, even amid slower activity, demand remained resilient enough to keep rents elevated.”

With inventory shrinking in Brooklyn, he noted, renters “are also facing a competitive landscape with fewer available options.”