Manhattan defies U.S. housing nightmare, sets record

By Ilaina Jonas

NEW YORK (Reuters) - The U.S. housing market may be a seller's nightmare but Manhattan's was a dream in the fourth quarter as foreign buyers pushed up demand while supply stayed tight, sending the average sales price to a record high.

Two swanky condominium projects, The Plaza and 15 Central Park West, helped propel the average price of a Manhattan apartment to a record $1,439,909, up 17.6 percent from a year earlier and 5.1 percent from the third quarter, according to Prudential Douglas Elliman Manhattan Market Overview.

"Foreign demand has been a big part of the story," said Jonathan Miller, director of research at Radar Logic and author of Prudential's quarterly overview reports, but foreigners are not permitted to buy cooperatives.

"In a lot of new development we've seen significant activity from domestic purchasers as well," Miller added.

The average price per square foot of $1,180 set a record, up 18.2 percent from a year earlier and 3.1 percent from the prior quarter, according to the Prudential report.

The median price -- where half the sales prices are above and half below -- rose to $850,000, up 6.4 percent from a year earlier, according to the Prudential report.

The average sales price of a U.S. home overall declined last year. Prospective buyers in many U.S. markets have found prices still too high, and stiffer mortgage requirements arising out of the subprime crisis have also sidelined them.

The overall market suffers from a 10.3-month overhang of supply of homes for sale.