New York City’s November rent gains showed seasonal norms are no match for mortgage rates.
The median rent in Manhattan clocked in at $4,200, a whopping 5 percent higher than the same month last year and the greatest year-over-year increase since September 2023, according to a report by appraiser Jonathan Miller for Douglas Elliman.
November marked the second straight month that Manhattan rents surged annually, a trend replicated in Brooklyn, where the median rent was $3,500, and Northwest Queens, where it hit $3,458.
The upticks are notable because leasing demand typically wanes in the colder months as more tenants call off the housing hunt and wait for warmer weather and more listings come spring.
Not this year. The number of new lease signings last month surged by 38 percent annually in Manhattan, 40 percent in Brooklyn and 65 percent in Queens.
The culprit is the usual suspect: mortgage rates.
“Elevated mortgage rates remain a significant factor in pushing rents higher,” Miller said.
Mortgage rates, historically speaking, aren’t that high. They peaked at 6.9 percent in November, according to Zillow Mortgage API — a far cry from an all-time high of 18 percent in the ‘80s and below the post-Covid record of 8 percent.
But between higher housing prices and strong demand, buyers are still opting to wait and see if rates tick down.
Markets have priced in another rate cut at the Federal Reserve’s Dec. 18 meeting, and mortgage rates, which are influenced by the Federal Fund rate, have fallen through most of December. As of Tuesday, they hung around 6.6 percent.
Whether they fall further in 2025 will depend, in part, on President-elect Donald Trump.
Trump promised to bring mortgage rates down “very fast” but his policy proposals, including tax cuts, tariffs and mass deportation, figure to fuel inflation. Higher prices could push the Fed to halt or reverse its cutting cycle, which could keep mortgage rates high or push them higher.
And as long as mortgage rates stay high, rents will, too.
This article originally appeared on The Real Deal. Click here to read the full story.