December rarely makes headlines in Manhattan real estate, but last month quietly clarified how the market closed 2025 and how it is entering 2026. Beneath the expected holiday slowdown, the data points to a market that remains supply-constrained and more active than the calendar would suggest.
Inventory dropped to 5,046 properties, down 20.26% from November. Much of that decline was seasonal, driven by sellers pulling listings during the holidays. This is common to avoid distracted buyers and accumulating days on market. However, inventory was also down 11.76% year over year. New listing rules from StreetEasy and the Residential Listing Service also contributed to this decline. Days on market used to reset to zero after a 90-day hibernation period. Now only 30 days off market resets the days on market to zero, making temporary withdrawals more attractive and has suppressed visible inventory compared to prior years.
Inventory is now approaching the lows we saw in 2015, but for very different reasons. This is not a demand-driven squeeze. It is the result of the new reset policies, but also the Volume Trap: owners locked into ultra-low mortgage rates who are financially disincentivized to sell, paired with steady but unspectacular buyer demand. Supply is constrained, not scarce, and pricing confirms this: Median price per square foot held at $1,380, up only 0.8% month over month and 0.88% year over year.
Even with fewer listings, buyer activity increased. Properties in contract rose to 2,980, up 7% month over month and 2.76% year over year, confirming that serious buyers stayed active through December. Median days on market fell to 75, down 3.85% from November and 11.76% from last year, though this metric will be less reliable moving forward as reset rules increasingly obscure true market exposure.
The Volatility Index, which measures the ratio of listings to contracts, fell to 1.69, down 0.58 from November. On its face, a reading above 1 signals a buyer’s market and suggests a sharp shift. In reality, like inventory levels, the index is now partially distorted by listing reset policies, making the change appear more dramatic than the underlying market conditions justify. Based on the Volatility Index, all of 2025 was a buyer's market.
The Compass Q4 2025 market report shows that the final quarter was Manhattan’s strongest in several years, and December contributed meaningfully. Contract activity held up, days on market compressed, and pricing stabilized across segments. The year ended on firmer footing than the prevailing narrative suggests.
Zooming out, December fit squarely into the broader pattern of 2025. Buyers stopped waiting for rate relief and adjusted expectations. Sellers became more selective, choosing timing over price cuts. Platform and policy changes reshaped how market health appears on paper, even as behavior shifted more gradually.
As listing policies continue to distort surface-level metrics, a multi-factor view is essential. No single benchmark tells the full story. Assessing Manhattan real estate now requires weighing inventory, contracts, pricing, volatility, and policy effects together. When you do, the conclusion is clear. Constrained supply and measured demand led to a stable close to the year, setting the tone for 2026.
Best Wishes,
Boris Fabrikant, Esq. and Collin Bond, Esq.
