Long Island real estate market sees fewest deals in years in January

The number of homes sold across Long Island in January was the fewest for a single month in years, and prices on the most recent sales are trending downward. But there are signs homebuyers have yet to get meaningful relief.

The median sale price in Nassau County last month was $660,000, or 1.5% higher than in January 2022, according to new data released Wednesday by OneKey MLS. In Suffolk, the median increased 2.9% year over year to $535,000.

Data on pending deals, which have yet to close, suggested prices for completed sales could move lower in the coming months. That’s because it can take months to finalize a sale.

The median pending sale went for $625,000 in Nassau County, which was 3.8% lower than in January 2022, while the median in Suffolk fell 3.1% year over year to $515,000.

“It does seem like prices are softening a bit, especially if you focus on pending sales,” said Richard Haggerty, CEO of OneKey MLS. “Do I think there will be a huge correction? I don’t.”

The number of closings last month dropped well below typical levels in both counties even for January, when seasonal trends usually dictate a dip. There were 709 closings in Nassau last month, which was 42% lower than during the same month a year ago. That’s the lowest number since May 2020, when sales were affected by the onset of the COVID-19 pandemic.

Suffolk County had the fewest closings, 894, since March 2015. There were 36.1% fewer sales than in January 2022.

Overall, sales were down nearly 39% last month on Long Island compared with the previous January.

Haggerty attributed the sales slowdown to buyers staying on the sidelines at the end of last year, when mortgage rates were more volatile and there was greater fear of a recession in 2023. Recent economic data, including better-than-expected reports on employment and retail spending, bode well for homebuying. 

"Consumer confidence seems to be pretty resilient right now," he said. 

But stubbornly high inflation reported this week could lead the Federal Reserve to keep its benchmark interest rate higher for longer, increasing borrowing costs for homebuyers. 

Listings remain sparse

The much slower pace of sales has done little to fix Long Island’s shortage of homes for sale. The number of listings fell for a fifth straight month to 5,082 at the end of January. That's about half as many homes on the market as there were in January 2020 before a surge of COVID-19 cases hit New York. 

 "When you compare New York to other destinations, like South Carolina, North Carolina, Florida, what those states do have is a lot of new construction," Haggerty said. "Currently, we’re not keeping pace with bringing new construction online to help with our inventory problem."

That shortage has persisted even as mortgage rates have climbed in the past year, making homebuying more expensive. The average rate for a 30-year fixed mortgage last week was 6.12%, according to mortgage giant Freddie Mac. That compares with 3.69% during the same week a year ago.  

Jonathan Chandler, a real estate agent at Compass in Rockville Centre, said that while higher mortgage rates have led buyers to adjust their budgets, he believes they’ve done little to wrest negotiating power from sellers.

“There’s truly not enough inventory for the demand right now,” he said.

Given the lack of options, if homes don’t attract buyers within 30 to 60 days, the market is telling the sellers their prices are too high, Chandler said.

“If the price is bloated, they’ll get a reduction fairly quickly,” he said.

Still seeing multiple offers

Andrew and Li Chrzanowski, real estate agents at Keller Williams Points North in Woodbury, held an open house last weekend for a three-bedroom colonial in Bay Shore that is listed at $529,000. More than 40 families attended across two days and the seller received multiple offers.

While that’s about half the attendance the couple saw during some open houses last year, it is still plenty to generate competition for the home, said Andrew Chrzanowski.

The house had previously been listed by a different agent in November for about $650,000 and then cut to about $580,000 in December, according to public records. But when the seller failed to find a deal, the house was withdrawn from the market and then re-listed by the Chrzanowskis this month.

Choosing the right price for a home based on recent comparable sales is critical to finding a buyer in this market, Andrew Chrzanowski said.

“Everyone wants that big number. A big number doesn’t come from one buyer and our job is to get the most attention possible on that property, and it starts with pricing,” he said. “If a house is priced right, it will sell.”