Compass Q2 data shows luxury condo activity up even as New York's new second-home tax bites
New York City's first-ever pied-à-terre tax — an annual surcharge on non-primary residences valued at $5 million or more — took effect July 1, after months of warnings that wealthy buyers would flee the market. They didn't.
According to the Compass Q2 2026 Manhattan Market Report, contracts on properties priced between $10 million and $20 million surged 38.6% compared to the same period last year, while signings for the $20 million-and-above tier rose 25%.
The luxury condo segment led the quarter, with activity in the $10 million to $20 million price range climbing 54.5% and the $20 million-plus bracket posting a 33.3% increase in contract volume alongside a 13.9% rise in average asking prices.
Overall contract activity across Manhattan reached 2,994 agreements in Q2 2026, up 3% year-over-year, per Compass.
Recorded sales finished at 2,696, down 3.5% from the prior year, a figure Compass attributed to constrained inventory rather than weakened demand.
The average sales price rose 4.5% year-over-year to $2,209,022, while the median climbed 6.3% to $1,275,000.
Why the market held firm
The surcharge, passed by the New York State Legislature on May 27 and championed by Mayor Zohran Mamdani, was expected to prompt second-home buyers to reconsider or relocate.
Instead, demand at the top of the market accelerated. As Mortgage Professional America reported ahead of its passage, NYC's pied-à-terre tax was unlikely to rattle the luxury market, a call that Q2 data has since validated.
Melissa Cohn, regional vice president at William Raveis Mortgage in New York, told MPA the pattern was familiar.
"Remember when the mansion tax started, and everyone said people aren't going to buy, and this is a problem, and it's going to ruin the real estate market? And nothing really happened," Cohn said.
"The mass exodus never happened."
At the very top of the market, the math explains why. For properties above $25 million, the pied-à-terre surcharge amounts to an effective rate of just 1.3%, according to a separate Real Deal market analysis.
The New York City Comptroller estimates the tax will generate between $340 million and $380 million annually, below the $500 million projection cited by Mamdani and Governor Kathy Hochul.
Compass broker Christine Miller Martin pointed to the capital forces driving demand regardless of tax policy.
"Record equity markets, strong Wall Street bonuses, generational wealth transfers, and major liquidity events from recent IPOs have put capital directly in the hands of the buyer pool competing for these assets," she said in the report.
Inventory, not taxes, defines the market
Active listings across Manhattan fell 8.2% year-over-year to 6,616 units, with new listings declining 13% over the same period, according to Compass.
Miller separately reported luxury inventory at its lowest level since he began tracking it in 2004, with luxury listings down roughly 40% from the prior year.
That scarcity is pushing prices higher even as broader affordability pressures keep the rest of the national market subdued, a divergence MPA has tracked in wealthy buyers pushing luxury home prices up as rates bite across major metros.
Jumbo originators working with cash-flush buyers at the upper end of the Manhattan market are seeing that dynamic firsthand.
Compass agent Tony Sargent captured the broader mood: "The negative predictions of a year ago have not come to fruition," he said in the Compass report.
"The ultra-wealthy continued confidence in New York is going to lead the market."
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