The Market Report: September 2025

The Pucker | Heinlein Team
09/2/25

The Up Cycle

Now that summer has come to its end, we wonder if our New York City real estate market will see an influx of buyers and sellers emerge with a back-to-school determination. Several factors this year may influence market trajectory as we move into the final quarter of the year next month and look toward 2026.

The Fed pointed to interest rate drops this past month. Mortgage rates have tiptoed downward this year with a 30-year fixed product now hovering around 6.5%, this past week seeing an 11-month low. Most industry predictions are that rates will remain fairly consistent with any notable declines more toward the end of 2026.

It seems most new buyers have shaken the notion that rates are high. But many existing property owners who would be buyers feel cuffed to their properties with low mortgage interest rates, either unable to get over the mental hurdle of a much higher rate than they obtained in those crazy low-rate years or simply unable to afford the jump. So, they compromise with their current situation – kids sharing rooms longer, an office in their bedroom or a living room bursting with toys. This arrested situation also depletes the market of property inventory – so not just less buyers for consumption but less properties they are bringing to market.

That said, inventory continues to remain historically low, with last month seeing another significant decrease across Manhattan and Brooklyn. That was expected, as sellers hold off listing until early fall. This next month typically shows a jump in properties on the market, and we anticipate this month will prove typical. But low inventory has affected a lot of buyers’ sentiments; it’s not just low inventory but even lower quality in some segments. For those who don’t have the steam to hunt for the diamond in the rough, the hunt feels too daunting.

For the buyers who currently don’t own, median rent in New York City has escalated to roughly $5,000 a month, exacerbated with fierce competition in many neighborhoods, as the extremely low rental vacancy rate hovers around 3%. For many renters, the numbers are strongly influencing the idea that buying is within reach, despite higher interest rates, as their monthly outlay on rent continues to increase significantly.

There’s a long-game opportunity for buyers who are currently on the field and those thinking of getting in. This is what a cycle looks like: Low inventory and high rates influence low buyer sentiment so low buyer activity, which presents low competition and lower prices which offers high potential for gratification and long-term gain for committed buyers. The cycle then continues: Interest rates decrease, property inventory increases, buyer sentiment increases, buyer pool increases, buyer competition increases, prices increase.

The current long-game opportunity lies in the blend of lower inventory, lower competition, lower pricing and higher rates. Taking advantage now to purchase may mean hunting through the rough, but locking in that property now offers the opportunity to refinance to a lower interest rate in a few years when it is very likely rates will come down. The purchase price of a property never changes, the mortgage rate can.

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