Manhattan luxury home deals resist early pressure from second-home tax

Manhattan’s high-end residential market showed little immediate strain in June after New York approved a new tax on second homes, with 126 contracts signed for apartments priced at $4 million or more, according to Olshan Realty. That compared with 124 contracts in the same four-week period a year earlier, suggesting that liquidity among wealthy buyers and limited supply have so far offset concerns about the levy.

The tax, approved by Gov. Kathy Hochul and state lawmakers on May 27, applies to non-primary residences valued by the city at more than $1 million. It took effect this week and covers homes meeting the criteria as of Jan. 5, 2026, meaning qualifying purchases this year are subject to the surcharge in addition to existing property taxes.

Real estate groups, developers and brokers had warned that the measure could discourage purchases, reduce values and slow construction. The Real Estate Board of New York said after passage that the second-home tax would weigh on market activity, property prices, development and the broader city economy. Some market participants linked those concerns to what they called the “Mamdani effect,” referring to Mayor Zohran Mamdani and fears of tax-driven wealth flight.

Early sales data have not shown a pullback at the top of the market. Brown Harris Stevens said the average Manhattan apartment price rose 5% from a year earlier in the second quarter to about $2.2 million, the second-highest level it has recorded. Compass said condo sales between $10 million and $20 million increased 55%, while sales above $20 million rose 33%; the brokerage also reported a 14% rise in average asking prices in that upper tier.

June transactions included an $80 million duplex penthouse near the West Village, a $26 million downtown condominium and a $22 million Upper East Side co-op, according to brokers cited by CNBC. Lauren Muss of Douglas Elliman said wealthy buyers continue to bring substantial capital to the market, and noted that a $17.5 million condominium listing she handled went into contract in June.

Lawyers and analysts cautioned that the long-term effect of the tax remains uncertain. Legal disputes may develop over city valuations, co-op treatment, residency status and other implementation questions. Hochul and Mamdani have said the tax is expected to raise $500 million annually, while the New York City Comptroller’s office has estimated revenue of about $340 million to $380 million.

Some buyers did pause when the proposal first emerged, according to brokers. Scott Hustis of Paradigm Advisory at Compass said a prospective buyer for a $16.5 million penthouse duplex at Madison Square Park Tower stepped back after the tax was announced in April. Hustis said interest returned as the rules became clearer, and the apartment went into contract on June 6. He declined to identify the buyer or say whether the property would be used as a primary residence.

If the Madison Square Park Tower apartment is not a primary residence, Hustis said the pied-à-terre bill would exceed $98,000 for the fiscal year based on city valuations, separate from standard property taxes. He said very wealthy buyers appear more focused on timing purchases in a firm market than on the incremental tax cost.

Tight supply is also supporting sellers. Jonathan Miller, chief executive of appraisal and research firm Miller Samuel, said luxury inventory is 40% below last year and at its lowest level since he began tracking the segment in 2004.

Marc Palermo of Douglas Elliman said a $19 million apartment at 565 Broome Street went into contract in late June after earlier offers had come in 20% to 25% below the asking price. Palermo said the buyer already owns in the building and, because the buyer is not a primary New York tax resident, will likely face the new tax. He also said recent high-end Manhattan buyers are largely paying in cash, with family offices, trusts and parental gifts helping finance some purchases by buyers under 40.

This story draws on original reporting from CNBC.