Purchases closed at a median of $1.16 million in the fourth quarter, up 5.1% from a year earlier, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. It was the first annual increase since the third quarter of 2022, the firms' data show. 

While the overall number of transactions declined, sales at or above $5 million jumped in the fourth quarter. In a period when mortgage rates were climbing toward 8%, more than two-thirds of Manhattan buyers paid cash, the highest share since Miller Samuel started tracking the metric in 2014.

The market may already be swinging back in mortgage borrowers' direction. Financing costs have fallen sharply in the past couple months as traders gain confidence that cooling inflation will enable the Federal Reserve to cut interest rates this year.

Contracts to buy homes in Manhattan — a more timely indicator of demand than closed sales — rose in December from a year earlier, according to a separate report by the two firms. The increase signals the start of a process in which lower interest rates bring in more buyers, and prompt more sellers to list their homes. 

Prices likely would increase in that scenario, said Jonathan Miller, president of Miller Samuel. 

"The market is giving early signs that it's beginning to rebound," Miller said. "It's not going to do an about-face overnight, but it's trending to stronger performance in terms of transactions and inventory and, to a certain degree, prices."