Market Perspective · August 2026

Supply Left. Demand Stayed.

At first glance, July's 17.9% monthly decline in signed contracts looks alarming. But context changes the story: 879 contracts were signed, just 0.2% fewer than last July and only 12 below the rolling seasonal average of 891. That benchmark itself fell 12.6% from June, suggesting that most of July's slowdown was seasonal.

What genuinely moved was inventory. Active listings fell to 4,759, down 20.4% from June and 19.4% from last July. New listings dropped to 883, down 28.9% monthly and 17.5% annually. Manhattan posted a net inventory decline of 971 listings, and months of inventory tightened to 5.8.

Demand in the pipeline kept building through the supply decline. Pending sales reached 3,967, up 3.4% on the month and 32.6% over last year, the strongest annual comparison in this brief. Closed sales rose 8.3% from June to 1,188, although they remained 5.8% below last July. Price cuts fell to 765, down 32.5% monthly and 12.8% annually.

Pricing itself barely moved. The median sale price settled at $1.29 million, down 1.3% monthly but up 4.3% annually. Median price per square foot held at $1,426, essentially flat on both the month and the year.

Sharply lower supply, rising pending sales, and flat discounts point to a market that is tightening without a price spike.

Two demand measures appear to disagree, and the disagreement is worth resolving directly. Only about 12% of Manhattan listings found a buyer in June, and the July listing climate is considered "Challenging." Yet pending sales sit 32.6% above last year. Both are true, and read together they say something more useful than either says alone: demand is strong but concentrated. The 12% is a per-listing hit rate, and it is actually a point better than a year ago. It stays low because Manhattan buyers are selective, not because they are absent. The pending figure is a pipeline, and a thick one. Buyers are committing in volume, just not across the whole inventory. The right property draws offers; the wrong one records another month on market.

Policy Watch · The Clock That Kept Running

October 6 Is Now the Deadline. The Lawsuit Is Not a Reprieve.

Who may be affected

For tax years 2026-27 and 2027-28, the surcharge may apply to non-primary-residence co-ops and condos valued by DOF at $1 million or more, and one- to three-family homes valued at $5 million or more. The operative figure is DOF market value, not purchase price, appraisal or estimated resale value.

Appearing on the supplemental roll does not establish liability. A DOF determination letter is what requires a response. DOF mailed roughly 17,000 notices in July. Updated state tax data subsequently cleared 1,210 properties, and DOF says approximately 10,800 notices based on the newer data will be mailed by August 31.

A primary-residence exemption may apply when the home is occupied by an owner, qualifying tenant or subtenant, immediate family member, qualifying majority owner of an entity, or the sole beneficiary or beneficiaries of a trust. For landlords, collecting rent is not enough: the tenant must use the property as a primary residence under a bona fide, arm's-length lease of at least one year.

What it could cost

Co-ops and condos: 4.0% from $1 million to under $3 million; 5.25% from $3 million to under $5 million; and 6.50% at $5 million or more.

One- to three-family homes: 0.8% from $5 million to under $15 million; 1.05% from $15 million to under $25 million; and 1.3% at $25 million or more.

These are not marginal brackets. Once the threshold is met, the applicable rate is imposed on the property's full DOF value. A nonexempt condo valued by DOF at $1 million and a nonexempt house valued at $5 million would each generate a $40,000 annual surcharge.

That comparison explains the apparently higher co-op and condo rates. For these first two fiscal years, DOF values co-ops and condos under a different, generally lower valuation method. Run the calculation against the DOF value, not the sale price. Charges for 2026-27 will appear on the property-tax bill due January 1, 2027.

What the courts have not done

A trial-court order briefly paused implementation on August 10, but the city's appeal stayed that order three days later and the rollout resumed. Oral arguments are scheduled for August 31; the merits remain undecided. No court has extended the filing deadline.

The review process is already changing outcomes. By August 25, DOF had approved approximately 2,900 of the roughly 5,500 submitted responses, with about 2,650 still under review.

What to do now

Apply at nyc.gov/npsurcharge using the PIN on your letter; call 311 if you cannot locate it. Expect to provide a recent federal or state tax return or DMV identification for each claimed primary resident. Tenant applications require lease and occupancy evidence. Entity and trust ownership requires governing documents and supporting affidavits.

One procedural trap: if you ask the Tax Commission to decide residency as part of a property-value challenge, DOF will stop reviewing the same residency question and defer to the Tax Commission. If both value and residency are disputed, determine the filing strategy with counsel before submitting.

This summarizes a changing legal and administrative situation as of this publication. It is not tax or legal advice. Confirm your position with your accountant or counsel before filing.

Property Type Watch

The Gap Reopened

June's narrowing co-op-to-condo gap did not continue. In July, condo PPSF rose 2.5% to $1,582 while co-op PPSF fell 1.4% to $956. The marketwide co-op discount relative to condos widened from roughly 35.3% to 39.6% in one month.

The annual picture points in the same direction. Co-op PPSF was down 4.4% from last July, while condo PPSF was nearly flat at down 0.3%. Dollar medians looked stronger: the condo median reached $1.812 million, up 0.6% monthly and 12.6% annually, while the co-op median held at $887,500 and rose 0.9% from last year.

Those figures are not contradictory. Medians shift with the size, location, condition, and price tier of the apartments that happen to close. PPSF is a useful cross-check, but it is not a same-property appreciation index either. In co-ops especially, reported square footage can be incomplete or less standardized.

Luxury Market Watch · $4M+ · As of July 2026

Selling Faster, Selling For Less

Luxury produced two different signals at once. Contracts fell sharply from the spring peak to 100, yet still finished 8.7% above last July. Months of inventory tightened to 9.3, and median days on market fell to 84, down 8.7% annually. The segment is clearing faster than it did a year ago.

Pricing tells the softer half of the story. The $4M+ median fell to $6.21 million, down 3.7% annually, while PPSF declined 8.3% to $2,346. Those aggregate moves can reflect deal mix as well as negotiation, so they should not be read as an automatic 8.3% markdown on every luxury property.

The Rental Market · As of July 2026

Record Rents, Vanishing Listings

Manhattan rents did not climb again in July. They simply refused to come down. Median rent held at a record $5,295, flat from June and 6% above last July. Average rent reached $6,655. Active listings were 22% below a year ago, and visible vacancy remained exceptionally low at 1.56%.

The market still moved. Manhattan recorded 5,167 leases reported signed, up 10% monthly and 3% annually. Apartments took an average of 33 days to lease, three days faster than in June.

Data shows the split behind the headline. Annual asking rents rose 5% for studios to $4,021, 5% for one-bedrooms to $5,363, and 4% for two-bedrooms to $7,662. Three-bedrooms fell 2% to $11,327, while the $12K+ segment declined 3% to $20,583.

Unit counts were uneven too. Studios increased 7%, while three-bedroom and $12K+ units declined 10% and 12%. Smaller apartments have stronger pricing momentum; the upper end is showing more price sensitivity.

Neighborhood Spotlight · Hudson Yards · July 2026

Where Buyers Still Have Room

Start with the caveat because it matters more than the headline: only nine apartments closed in Hudson Yards in July. At that sample size, the 67.8% monthly jump in median sale price describes which units happened to trade, not what every building gained in value.

The negotiating picture is more useful. Hudson Yards carried a 12.6% median listing discount, compared with 3.8% across Manhattan. Median days on market were 105 versus 67 marketwide, and months of inventory stood at 7.1 versus 5.8. Those figures point to more buyer leverage than the boroughwide averages suggest.

Forward indicators are mixed rather than uniformly improving. Pending sales reached 36, up 20% annually, and months of inventory fell 40.8% from last year. Yet only eight contracts were signed during July, down 33.3% annually, while the liquidity pace measure was down 36.4%. Supply has tightened, but deal flow is still uneven.