No relief for Long Island homebuyers in November as supply shortage deepens
Long Island buyers continue to face a tight supply of homes for sale. Credit: Newsday/Steve Pfost
New data on Long Island home sales in November show prices may have peaked for the winter, but house hunting got even tougher this fall, with Nassau County recording the fewest listings in at least 35 years.
The median sale price in Suffolk County was $600,000, in November, matching a record set in the previous month. That price represents a 10.1% increase compared with November 2022, according to data from OneKey MLS.
In Nassau County, the median sale price was $710,000 last month, or 6.8% higher than the median a year earlier. The median in Nassau hit a record $735,000 in September before falling in the next two months.
The price appreciation over the past year is notable given that the average rate for a 30-year fixed mortgage reached its highest point since 2000 in late October, at 7.79%. Mortgage rates have since fallen to 7.03% for the week ending Dec. 7.
WHAT TO KNOW
- Long Island home prices rose substantially in November compared with the previous year even as homebuyers faced high mortgage rates.
- The median price in Suffolk County rose 10.1%, matching a record $600,000. The median in Nassau increased 6.8% to $710,000 compared with November 2022.
- The number of sales last month was down about 20% across the Island, and Nassau had the fewest homes for sale in at least 35 years at the end of November.
Homebuyers received positive news on the rate front Wednesday when the Federal Reserve said it is likely done raising its benchmark interest rate to tame inflation. Forecasts from Federal Reserve policymakers indicate they expect to cut the key rate three times next year, which could lead to lower mortgage rates.
“We are turning the corner when it comes to interest rates,” said Richard Haggerty, CEO of OneKey MLS. “I think that we're going to continue to see a downward trend with interest rates … and that really should set the table for a much more robust 2024.”
Higher borrowing costs have significantly reduced the number of sales. There were 1,791 closed sales last month across Long Island, which was nearly 20% fewer than in November 2022.
A shortage of homes on the market has helped support higher prices this year even as mortgage rates have made it much more expensive to purchase. There were 4,639 homes on the market at the end of November across Long Island, which was down nearly 23% from the previous year and the lowest since February 2022.
Nassau County listings have fallen particularly sharply. There were 2,037 at the end of November, a 36.4% decline compared with the same month a year ago when inventory was already low.
The number of homes for sale in Nassau is the lowest in at least 35 years, according to OneKey MLS data. Before the pandemic, there were more than 5,000 homes for sale in Nassau alone. Today there are fewer listings available in both counties combined.
Haggerty is optimistic that lower interest rates could bring more houses onto the market after many homeowners with mortgage rates below 5% decided to stay put this year.
“Interest rates really affected sellers’ decisions more than buyers,” Haggerty said. “The buyers were out there, and that’s why prices continued to accelerate.”
Margaret Burkett, a real estate agent at Douglas Elliman in Locust Valley, said she continues to see homes that are priced reasonably receive multiple offers above their asking prices. While lower interest rates will benefit buyers, it could also increase competition next year.
“When the interest rates go down, the competition is going to go up and the prices are going to go up,” she said.
Gail Carillo, an associate broker and team leader at Coldwell Banker American Homes in Ronkonkoma, said she’s noticed more buyers than usual have been walking away from deals after having their offers accepted. She attributes that increase to buyers having to relinquish control to sellers, sometimes waiving appraisals or inspections, and the effect of mortgage rates on monthly payments.
It’s not unusual to see a family with a monthly payment of $5,000, including taxes and insurance, for a modest house, she said.
“We’re seeing more breaking of deals as they get to the contract level and that comes as a result of buyers having to purchase in a vice,” Carillo said. “… They’re purchasing with so few choices and making so many concessions.”
Data on home prices for pending sales, which had not yet closed, in November suggest median prices are trending lower, which is typical as the weather gets colder. The median pending sale last month went for $700,000 in Nassau County and $585,000 in Suffolk County.
Sellers anticipating listing their homes will likely still be happy with home prices, Carillo said, even if competition isn’t as fierce as it was back in 2021.
“A lot of people are asking the same question, ‘Did I miss the boat?’ The boat is very much still in the harbor. The yacht may have pulled out,” she said.
Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.
