Tax Overhaul Dents New York Home Sales

The number of homes sold in Manhattan dropped by nearly 25 percent in the first part of this year, compared with the same period last year, according to an analysis for Douglas Elliman by analyst Jonathan Miller. Miller said the drop-off is smaller, but still noticeable, across the region, and the reason is clear: the federal tax overhaul signed into law last December has caused both buyers and sellers to put their plans on hold.

The new tax law reduces perks for buyers in high-cost markets, like New York and the surrounding suburbs. It includes a lower cap for mortgage interest deductions, and reduced property tax deductions.

“If we were having this conversation say, in Dallas, Texas, you wouldn't feel it,” Miller said. “But here in New York and along the eastern seaboard and on the west coast, we're seeing a lot of sales activity cool. Which is in sharp contrast to the rest of the country.”

Both home prices and rents have declined. But that doesn’t necessarily mean New York is more affordable. Most of the softening is concentrated in the luxury market.