Home prices on Long Island jumped again last month, but rising inventory and uneven sales activity indicate the market may be starting to slow down, a new report shows.
The median home price in Nassau County rose to $525,000 in November, a 7.8 percent increase compared with the same month last year, the Multiple Listing Service of Long Island reported Thursday.
In Suffolk County the median home sales price rose to $380,000 last month, a 7 percent increase from last year.
On Long Island, “you’re seeing prices are at or near record levels,” said Jonathan Miller, chief executive of Manhattan-based appraisal company Miller Samuel. But, he said, prices are “not the barometer on the health of the market. The health of the market is sales, transaction volume.”
Through that lens, Long Island appears to be coming late to a market slowdown that has already hit New York City and the nation as a whole, he said.
Throughout the region and across the country, Miller said, “we’re seeing prices at or near record levels, but we’re seeing sales either beginning to decline or slow their rate of growth and we’re seeing inventory rise fairly quickly.”
The market is already cooling off in New York City and in Westchester and Fairfield counties, said Miller, who publishes market reports on regions throughout the country. The causes of the slowdown include rising interest rates and the new federal tax law, which caps deductions for state and local taxes at $10,000. The new law hits high-tax areas such as Long Island especially hard, he said.
The average mortgage rate was 4.63 percent this week, up 0.7 percentage point from a year earlier, mortgage giant Freddie Mac reported.
“Long Island was one of the most robust markets [in the region] so it’s not leading the trend, it’s trailing the trend,” he said.
In Nassau, buyers had many more homes to choose from last month, with 4,978 homes listed for sale, up nearly 15 percent from a year earlier. In Suffolk, there were 6,274 homes on the market, up 0.3 percent year over year.
Sales activity has been inconsistent over the last few months.
Suffolk had 1,371 closed sales last month, down 6.9 percent from the same period in 2017, the listing service reported. Sales in Suffolk have fallen year over year in five of the last 12 months.
In Nassau, the number of sales increased year over year by 4.7 percent in November. Nassau sales have fallen year over year in eight of the past 12 months.
When the pace of buying becomes less frenzied and inventory starts to pile up, prices tend to level off or even fall within a year or two, he said.
“Sellers are usually the last to see it because they’re anchored to a prior market and they don’t want to meet the buyer” at a lower price, Miller said. The market, he said, “is turning and it’s like a supertanker, it takes a year or two to make it turn.”
To be sure, the Long Island market still favors sellers. At the current pace of sales, it would take about four and a half months to sell all the homes listed for sale, less than the six to eight months’ supply that brokers say represents a healthy market.
That low supply of homes could keep Long Island home prices fairly steady, despite the national and regional slowdown, Miller said.
“I think prices probably won’t change all that much,” he said. “Sales would have to fall more and inventory has to rise more for there to be a significant impact on pricing.”
Richard Amato, operating principal and broker at Keller Williams Greater Nassau in Garden City, agreed.
“I am preparing my agents for a shift in the market,” Amato said. "We could see in 2019 a little bit of a slowdown but do I think it's going to be drastic? No.”
Amato cited rising interest rates and local taxes as the factors likely to lead to a turning point.
"It's going to be an interesting 2019," he said.
Barbara Wanamaker, owner of Prime Properties Long Island in Huntington, said that sales activity typically slows down during the holiday months.
“Once you pass Thanksgiving, everything sort of shuts down to some degree," she said. Seasonal factors aside, there has been a notable amount of activity, but only for lower priced homes.
"The higher end is not moving as much,” Wanamaker said. "The things that are moving are the price ranges under $600,000.”