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By SHELLY BANJO

Prices of studios and one-bedrooms in Manhattan have taken a beating compared with bigger residences, as the demand from new home buyers runs out, tax credits expire and pickier buyers opt for bigger spaces.

That has led Rebecca Goldfarb to settle on breaking even as she attempts to sell her Greenwich Village apartment. She is listing her renovated one-bedroom duplex on West 11th Street for $995,000.

The median sales price for studios in Manhattan declined by 8.5% in the third quarter from the previous quarter to $375,000, according to a report by appraiser Miller Samuel Inc. and property broker Prudential Douglas Elliman Real Estate. Median sales price for one-bedrooms declined by 4.5% from the prior quarter to $610,000.

Meanwhile, median prices for three bedrooms in Manhattan increased by 3.8% and those for apartments with four or more bedrooms rose by 29% compared with the previous quarter, according to the report.

The low end of the market, typically comprised of studio and one-bedroom units, had been leading New York City out of the real-estate slowdown. The market for smaller apartments has started to lag as the spiked demand from first-time buyers peters out and lower prices for bigger places has sparked more interest from home hunters. In the third quarter, sales of studios and one-bedrooms were 45% of the market, down from 51% a year earlier, the report said.

“There are only so many first-time home buyers to go around, so before you were seeing an unusual amount of demand for studios and one-bedrooms and it was an anomaly,” Miller Samuel President Jonathan Miller says. “The reset in the recent quarter is a return back to a more normal distribution of properties.”

As the weather cools and the real-estate market enters into its typically slowest quarter, sellers across the city are having a harder time finding buyers for these properties, which make up nearly half of the city’s apartments, without offering serious price drops.

“I’ve had this studio on West 57th Street on the market for over a year now and virtually no one is coming to look at the apartment,” says Caroline Bass, a senior vice president at Citi Habitats. “We initially priced it at $310,000, lowered the price to $299,000, then $285,000 and now I’m trying to get the seller to reduce the price even more.”

Since the seller bought the studio at the height of the market, Ms. Bass says the only way to sell the property is to accept the idea of losing money on the transaction.

“There’s certainly more inventory than there was before and interest rates are low so clients have more choice and know they can get more for their money,” she says.

While the Miller Samuel/ Prudential report doesn’t break out prices by number of rooms for Brooklyn and Queens, Mr. Miller says the slowdown in studios and one-bedrooms is also playing out in outer boroughs.

At 80 Metropolitan, a new luxury condo building in Williamsburg, Brooklyn, the developer has been combining units to meet the demand for larger apartments.

“We noticed a shift in the increase in demand from smaller studio apartments to much larger homes, and wanted to answer that call with flexibility and variety in our floor plans,” says Douglas Steiner, chairman of Steiner NYC, which developed 80 Metropolitan.

The federal first-time tax credit for home buyers, which lapsed in April, helped lift demand up for smaller units, says Quinn Eddins, director of research at data firm Radar Logic.

“Now the tax credit seems to have run its course and the market has corrected,” he says.

Write to Shelly Banjo at shelly.banjo@wsj.com