Real estate prices, inventory rise in New York City

The average New York City apartment sale price increased 0.2 percent in the second quarter compared to the first quarter, and was 3 percent higher than in second-quarter 2005, according to a market report by appraisal firm Mitchell, Maxwell & Jackson Inc. The average sale price reached $1.17 million in the second quarter.

Meanwhile, the company's sales volume index dropped 1.5 percent in the second quarter compared to the first quarter, and dropped 9 percent below second-quarter 2005.

"The second-quarter numbers show a calm return to a more normal market," said Jeffrey Jackson, co-founder and chief economist for Mitchell, Maxwell & Jackson Inc., in a statement. He also stated that inventory levels rose 6 percent from the first quarter and were up 68 percent from the previous year.

Building permits, which set a record at 8,493 in 2005, have slowed, Jackson also noted. Permits for the first five months of 2006 reached 3,170 -- a 17 percent drop from the first five months of 2005. "As inventory numbers are now edging past absorption equilibrium, the question becomes, 'Can an oversupply be postponed in time to avoid a major glut of inventory?' And, 'How will rising interest rates impact on demand?'"

Among the findings in the second-quarter report:

• Sales of $1 million-plus represented a record 40 percent of all transactions in the second quarter, compared with 30 percent in the previous quarter and 31 percent in second-quarter 2005. Meanwhile, the share of sales between $500,000 and $1 million dropped from 48 percent to 41 percent.

• In the downtown market, an increase in the supply of loft apartments resulted in a 17 percent drop in average sale price, to $1.48 million -- the lowest in six quarters. The average sale price in midtown rose 6 percent to $1.05 million; the West Side was up 1 percent to $1.46 million; and the East Side dropped 3 percent to $1.12 million.

• The market share of condominiums grew to finish the second-quarter at 41 percent of all sales, the highest on record, up from 32 percent the previous quarter.

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