Manhattan apartment rents decreased in March for the first time in 2024, but stayed near record levels as mortgage rates and demand for rental apartments remained high.

March’s median rents in Manhattan hit $4,100 a month, down 3.1% from the previous month, according to brokerage Douglas Elliman. Across the river in northwest Queens, median rents came in around 1.2% below the previous month at $3,200 a month. In Brooklyn, median rents were flat compared to February.

Stubborn inflation and high borrowing costs kept aspirational property owners in the rental market, resulting in a surge in lease signings and minimal long-term changes to rent prices.

“The city’s creation of housing is no match for the increase in demand,” said Jonathan Miller, CEO of Miller Samuel.

While the decline in Manhattan’s rents stuck out after months of increases, Miller said it was really a nominal dip. March was the seventh consecutive month of a decline in apartment sizes rented out in the borough, he said, and smaller apartments tend to pull in lower rents.

“I don’t think it’s fair to describe the market as declining,” he said. “If you throw all of that in a blender, it’s telling us that the market is moving sideways at an elevated level.”

Year-over-year, median rents only declined slightly in Manhattan and Queens, coming in respectively at 1.8% and 3% lower than last March. But in Brooklyn, median rents were 0.1% higher than a year earlier.

“The boroughs’ rents are stuck at a high level,” Miller said. “It’s the excess demand spilling into the outer boroughs.”

Median rents in Manhattan are still lower than the record $4,295 level of last summer, but will likely ramp up as the city’s busiest apartment leasing months approach.

“A year ago we thought we were at peak pricing, but because mortgage rates haven’t fallen as expected, that has continued to put excessive pressure on the rental market,” Miller said. “People that were likely or would-be homebuyers are still in the rental market.”

The monthly numbers also showed the continuation of a trend seen in New York City for at least a year: would-be Manhattan renters pursuing cheaper options in Brooklyn and Queens.

New lease signings in Manhattan were up 9.8% compared to February, but 1.8% down from a year ago.

Brooklyn and Queens trended in the opposite direction, with new lease signings up by 23.4% from the previous month in Brooklyn and by 19.1% in Queens. Longer term, the boroughs showed serious volumes of new lease signings. Compared to a year earlier, signings were up by 45.8% in Brooklyn and 41.6% in Queens.

It's not as if Manhattan has fallen out of favor. March's new lease signings were the third-highest for the month in Manhattan since Douglas Elliman started tracking the numbers in 2008.

“There was an expectation set in the last six months that rents would fall because mortgage rates would fall,” Miller said. “That hasn't happened, so the rental market remains tight.”

High land and construction costs are among the other factors behind the high rental prices, making it hard for developers to build free market apartments that rent at lower prices, Miller said.

“The new product has largely been skewed to luxury, so we're not having all subsets of the market demand being met with new supply,” he said. “That's to the market's detriment.”

While longer-term housing supply remains a concern as construction starts have plummeted, there is a surge in new units for the time being, with listing inventory up 20% year-over-year in Manhattan, 3.3% in Brooklyn and 36.3% in Northwest Queens.