It’s time to dive into my NYC real estate market predictions for 2026! Here’s what I think will be in store for the new year.

More Appealing Interest Rates

Interest rates closed out 2025 at their lowest level, hitting 6.15% for the week ending December 29th. And I think this bodes quite well for 2026. While I still don’t expect us to see interest rates like we did back before mid 2022, there is a very real chance that rates could finally head below the 6% mark. 

There’s still a lot of uncertainty which could impact things and cause them to swing upwards again. Various geopolitical issues along with the ever looming threat of tariffs are things to watch. Although the latter could potentially be mitigated, depending on the outcome of an upcoming Supreme Court ruling.

Better Inventory in Brooklyn 

If my prediction about interest rates holds true, then it will finally turn on the spigot for listings in Brooklyn. 

Although inventory improved last year compared to 2023 and 2024, listing levels remained well below the 10 year average. The low levels are likely due to the seller lock in effect – sellers can’t (and won’t) trade up because higher interest rates make it an unwise financial move. But if interest rates hold in the low 6s and/or go below that, then more sellers in the borough may finally be willing to list their homes for sale. 

We could then see a compounding effect. Lower interest rates also tend to draw in more buyers. And buyers are likely to stick around if they think they have listing options. Engaged buyers means more contracts will start getting signed. And that means more sellers may feel encouraged to list as they sense a positive shift in the market. 

Solid Sales in Manhattan

Manhattan ended the year with a very strong quarter. In fact, it was the strongest fourth quarter seen since 2022. This combined with decent (but not high) levels of inventory plus better interest rates makes the borough poised to see a solid year. I wouldn’t be surprised if it ended up being one of the best years since 2022. 

Smaller apartments in particular may see a boom in activity if rents continue to remain high. The ever escalating cost of renting is causing the rent versus buy equation to tilt heavily in favor of owning for those who have enough money to afford it. 

A Rough Rental Market 

And speaking of the rental market – it’s likely going to be a rough one. 

Manhattan renters in particular should steel themselves. Although the City of Yes was passed at the end of 2024 and more developments (in particular office to residential conversions) are on the way, the bulk of construction activity is still a few years down the development road. So relief in the form of brand new apartments will be limited. 

And higher rents create a lock in effect for renters who don’t (understandably) want to brave the market for a new place if they don’t have to. So if that continues into 2026, it will further suppress inventory and keep prices high. 

Brooklyn is likely to fare a bit better. A lot of new rental inventory hit last year, and much of it has been absorbed. But there’s still more to come, especially in Gowanus and Downtown Brooklyn. So price growth will probably be muted compared to Manhattan. However, renters shouldn’t be surprised to see rents continue to slowly tick upwards, especially once the busy summer season hits. 

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