Home prices jumped by 7 percent in Nassau County and ticked up more modestly in Suffolk County last month, as the supply of homes shrank to its lowest level in more than a decade.
In Nassau County, homes sold for a median price of $460,000 in November, up $30,000 from a year earlier, the Multiple Listing Service of Long Island reported Wednesday.
Suffolk County homes traded for a median price of $335,000, a 1.5 percent annual gain, the listing service reported.
Throughout the Island, there were 11,961 homes listed for sale, nearly 23 percent fewer than a year earlier and the lowest number of listings since 2004. It would take just over five months to sell all those homes at the current pace of sales. A housing market with less than a six- to eight-month supply is tipped in favor of sellers, real estate brokers say.
The scarcity of homes “automatically drives the prices up, it’s simple supply and demand,” said Andy Yakubovsky, manager of Century 21 American Homes in Oceanside. “Sometimes within a week, the house is gone, and at times you’ve had a couple of offers on it already.”
The number of closed sales increased year-over-year by 10.2 percent in Nassau, where 1,012 homes changed hands last month, and by 15.3 percent in Suffolk, where 1,344 homes were sold.
For now, the gradual rise in interest rates is encouraging buyers to strike deals before rates rise further, Yakubovsky said. Last week, the interest rate for a 30-year, fixed-rate mortgage rose to 4.08 percent, up 0.54 percent since before Election Day, mortgage giant Freddie Mac reported. A year earlier, the average rate was 3.95 percent.
On Wednesday afternoon, the Federal Reserve announced that it would raise short-term borrowing rates by 0.25 percent. The relationship between short-term rates and mortgage rates is indirect, and a rise in short-term rates does not necessarily lead to an increase in mortgage rates.
However, if mortgage rates rise to 5 percent or more, Long Island home prices could drop slightly, Yakubovsky predicted.
“You might have a little bit of flurry” of buying activity while rates remain under 5 percent, he said, “but then people will say, ‘Oh, I can’t do this,’ and then [prices] will start inching back down.”
But some brokers and mortgage lenders disagreed.
“Rising rates means improvements in the economy, so it shouldn’t impact the purchase market in a negative way,” said Zahra Jafri, president of Lynx Mortgage Bank in Westbury and past president of the Empire State Mortgage Bankers Association.