The number of houses for sale plunged to a record low as Long Islanders continued to snap up homes faster than new ones came on the market in December, according to a new report from OneKey MLS.
There were 4,463 homes for sale on Long Island as of Jan. 7. Given the pace that sales went into contract last month, it would take just two months for all listings to sell in Nassau County and 1.7 months in Suffolk. In a market where buyers and sellers are on even footing, there is typically five to six months of supply.
"In the last 20 years we haven’t had it this low," said Jim Speer, CEO of OneKey MLS.
One factor that might have exacerbated the problem is the rise in COVID-19 cases in recent weeks, deterring people from listing their homes and hosting prospective buyers at open houses, Speer said.
The small selection of homes, and speed with which they’re selling, has kept prices high when compared to the year before. The median price of a home sold in Nassau County last month was $645,000, up 6.6% from December 2020. In Suffolk, the median sale price was $525,000 in December, which was 9.4% higher than in the same month a year ago.
While prices are up compared to a year ago, they are little changed from November's levels. The median sale price in Nassau fell $7,500, or 1.1% in December. compared with the previous month. It was the lowest the county's median price has been since June.
The median sale in Suffolk was $5,000 higher last month than in November, a 1% increase.
"The prices continue to level off, which is a good sign because a lot of times when you have low inventory it does make them continue to rise," Speer said.
Nick Sakalis, a real estate agent at Coldwell Banker American Homes in Syosset, said the number of listings won’t start to return to typical levels until buyers start to become more selective and houses linger on the market for longer periods.
"2022 is going to be a lot of the same," he said. "It might not be as rabid in terms of outrageous bidding wars, but the demand is still there. There are a lot of buyers who haven’t gotten the place they want and rates are still very low."
Fewer sales closed last month than in December 2020 in both counties. The closings dropped 20.5% to 1,309 in Nassau, and 22.1% to 1,726 in Suffolk. Some of that decline reflects an unusually high number of closings at the end of 2020 following the frenzied deal-making that occurred in the first year of the pandemic.
Monica Balsan, a real estate agent with Daniel Gale Sotheby’s International Realty in Stony Brook, said she’s seen some signs of the market recalibrating from its 2021 highs.
"The houses that need some renovating and repair and a face-lift have been sitting a little longer. I’ve seen a lot of price drops in our area," she said. "Houses that are move-in ready still tend to go over list price."
Rising mortgage rates could move some would-be buyers to the sidelines and slow the pace of sales, replenishing some of the inventory of homes. The average rate for a 30-year fixed-rate mortgage rose to 3.45% for the week ending Jan. 13, which represented an increase of one-quarter of a percentage point in one week.
The rate is the highest it has been since March 26, 2020, and comes after the Federal Reserve indicated it will raise interest rates multiple times this year to address inflation.
New York’s moratorium on foreclosures is slated to end Saturday, which could force some homeowners to sell their homes or banks to repossess properties and put them on the market later this year. Speer said he doesn’t expect any related increase in sales will be significant enough to affect real estate prices.
The moratorium put a halt to the market of homes for sale while in foreclosure, said Trevor Kemp, a real estate agent at East End Luxury in Southold, who represents asset managers making those sales and the investors who buy them. He expects more of those homes to hit the market this year as homeowners behind on payments face foreclosure.
"You’ve got to play catch-up," Kemp said of homeowners needing to make missed payments, "and catching up is hard to do."