The ever-higher apartment rents in Manhattan, one of the most expensive places to live not only in New York City but in the United States, are showing some signs of easing.

The indications come as the apartment vacancy rate topped 3% for the first time in more than three years since early in the pandemic, according to a new brokerage study. That increase coincides with apartment demand easing around the country, CoStar data shows.

Median Manhattan rent in September slipped 1.1% to $4,350 after reaching a record high of $4,400 in August, according to residential brokerage firm Douglas Elliman’s analysis compiled by appraisal firm Miller Samuel.

And while the September median rent level was still 8.2% higher than a year-earlier level, the vacancy rate last month topped the 3% threshold to increase to 3.07%, up from 2.42% in August and 2.34% in September 2022.

“What we are seeing is renters are pushing back given these rents have reached prohibitive levels in the past 12 months,” Hal Gavzie, executive vice president of residential leasing at Douglas Elliman, said in an interview. “Potential renters are just pumping the breaks a bit. ... Rents were pushed to unsustainable levels. The market needs some sort of reset.”

Landlord concessions rose to 1.3 months of free rent in September from 1.2 months in August, according to the study, known as the Elliman Report. The median rent excluding landlord concessions also fell 1.3% to $4,312 from $4,370 in August. That was still 8.3% higher than the year-earlier $3,982.

The market began to see signs of slowdown in August, which is uncharacteristic as the month is typically part of the peak rental season from May to September, Gavzie told CoStar News. Landlords are more willing to offer one free month of rent as a concession to get their properties filled instead of lowering the rent initially, he said.

Even if renters gain some upper hand, Gavzie said not to expect concessions of three to eight months in free rent that some landlords gave during the pandemic that began in 2020.

“The rental market has plateaued” at historically high levels, he said. Some renters are choosing to stay put while the ability to work remotely part time in a hybrid work pattern gives them more flexibility to see how the market shakes out, he said. That means more renters are opting to renew leases instead of moving.

The number of new leases signed last month in Manhattan fell 12.3% to 4,405 from August, according to the latest Elliman Report. Declines were observed across different sizes of apartments and across different neighborhoods. The city’s luxury rental market saw the number of new leases signed fall 12% to 456 month over month, with the median rental price slumping 11% to about $11,000.

New apartment development didn’t fare much better either, with the median rent there falling 9.8% to $5,500 from August and down 7.3% from a year earlier. That was the first time in five months that the median rental price for new developments declined year over year, even as the median rent in existing buildings continued its more than two-year ascent, according to the study.

By neighborhood, downtown Manhattan last month saw sharper drops in the number of new leases signed and in the median rent price compared to the east side and west side of the city even as the downtown’s median rent remains the highest in Manhattan.

Downtown Manhattan’s month-over-month median rent price fell 2.1% to $4,795 in September, with the number of new leases signed dropping 14%.

“Landlords recognize the market is topping out,” Jonathan Miller, president and chief executive of Miller Samuel, told CoStar News in an email. “One-year lease signings have surged in the past three months because tenants anticipate weaker pricing next year and new lease signings have been tepid — this means that landlords have been more aggressive on renewal signings.”

New lease signings slipped to their lowest level since May as landlords emphasize renewals, according to the Elliman Report.

The month-over-month median rent drop and the rise in vacancy rate also comes as Manhattan’s listing inventory surged 61.2% to 9,085 in September from August. Luxury listing inventory expanded annually for the first time in three quarters.

The slowdown isn’t just happening in Manhattan. The median rent levels in Brooklyn and Northwest Queens, two New York markets with record rental prices this year, also slowed in September as their respective leasing inventory rose.

New York isn't the only market showing signs of a slowdown.

When it comes to nationwide demand, the multifamily vacancy rate rose 0.1 percentage point to 6.8% over the past 90 days, an increase of 2.1 percentage points since a record low of 4.7% reached in the third quarter of 2021, according to a CoStar analysis.

While the so-called absorption, or space occupied, in the second quarter reached 105,000 units, the highest demand total since 2021, that was against the backdrop of 145,000 new units that came on the market at the same time.

“This supply/demand imbalance pushed the national vacancy rate up,” the CoStar study said.