NEW YORK (CNNMoney.com) - After pausing during the last two quarters of 2005, Manhattan real estate rebounded sharply in the first quarter of 2006, according to two reports issued Tuesday. But analysts pointed to several signs of weakness.

Median prices increased 11 percent compared with the fourth quarter of 2005 and 12 percent from a year ago, according to the Corcoran Group, one of the leading Manhattan real estate brokers. Prudential Douglas Elliman found an 8.6 percent gain from the fourth quarter and a 17 percent increase year-over-year.

But the statistics may be deceiving, according to Jonathan Miller, of Miller Samuel, the company that compiles the data for Prudential.

First he points to price per square foot. "Bigger Wall Street bonuses shifted the mix to larger apartments during the quarter," Miller said, lifting the median. But, he noted, price per square foot was mostly unchanged, at $1,004.

Miller's figures showed that two-bedroom, three-bedroom and larger apartments all increased as a percentage of apartments sold while the percentage of smaller apartments fell. Studios, for example, went from 18 percent of all apartments sold in the fourth quarter of 2005 to 14 percent last quarter.

Pam Liebman, CEO of the Corcoran Group, agrees. The demand for townhouses and luxury apartments went on unchecked during the first quarter, she said. Corcoran sold a Fifth Avenue townhouse for $40 million. It moved a Park Avenue pre-war penthouse for $25 million in a transaction that took just a week.

Another sign of weakness is inventory and time on the market. The average apartment now spends 138 days on the market, compared with 98 a year ago. Part of that is, with prices so high, there's a lot of building going on.

"New developments have added a lot to the inventory," said Liebman.

According to Dottie Herman, CEO of Prudential Douglas Elliman, added supply is keeping Manhattan price increases modest. "Last year there was practically no inventory; everything sold in a day," she said.

"It's a snow-ball effect," she said. "Buyers don't have the same sense of urgency they did last year when they thought if they didn't offer at least the asking price, they lost the purchase. They don't feel that way now. They take more time and see more places."

The saner market should prevail into the foreseeable future, according to Miller. "Higher mortgage rates are having a significant damping effect," he said. "Plus the development engine has been gaining momentum. There's a lot in the pipeline."

Still, those forces don't have a direct impact on the high-end of the market. "Trophy properties have been bullet proof," said Herman. She points out that interest rates have little or no impact on this segment and the wealthy have fared well in the current economy.

One segment of that market that has performed particularly well is downtown lofts. A lot of these open spaces that once housed some of New York's many small industries were illegally converted by artists into working/living lofts beginning in the 1950s. That trend was eventually recognized by the city, which rezoned large tracts of the old buildings to allow artists, and only artists, to lawfully inhabit them.

The average price per square foot for downtown lofts went to $1,043 from $941 last year.

Ironically, though, most artists can no longer afford to live in those spaces, and many have been snapped up by financiers, in part, for their proximity to Wall Street.

"So now you have the situation of a broker living in a $8 million SoHo loft with maybe his wife making clay pots," said Miller.

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