An aerial photo of a neighborhood of houses in Elmont.

An aerial photo of a neighborhood of houses in Elmont. Credit: Newsday/John Keating

Long Island home prices continued to rise in the first quarter as anemic inventory preserved the seller’s market and mortgage rates began to rise.

The median sale price on Long Island was $580,000 in the first three months of the year, or 10.5% higher than during the same period in 2021, according to new data released Thursday by real estate brokerage Douglas Elliman and appraisal firm Miller Samuel. 

The median for a single-family home sale was $600,000, while the typical condo sold for $360,000. 

In the Hamptons, the median sale price in the first quarter increased 7.7% to $1.4 million compared with the median a year ago, and the number of houses for sale set a record low for the second straight month. The median price rose 12.9% to nearly $847,713 on the North Fork, where prices have risen faster than anywhere else on the Island in recent years.

A shortage of listings buoyed prices but held back the number of closed deals, said Jonathan Miller, CEO of Miller Samuel. For the Island, excluding the East End, home sales fell by 12.4% to 6,820 compared with the first quarter of 2021. Meanwhile, the number of listings dropped by 28.2% to 3,972 as of the end of March. That was the second-lowest number of homes on the market at the end of a quarter since Miller began tracking the stat in 2003.

Buyer demand is typically judged by the number of closed sales, Miller said, but the fact that 48.6% of all homes on Long Island, excluding the East End, sold for more than the seller’s asking price indicates intense demand.

“Inventory is so limited that a doubling of inventory will still result in a historically low number,” Miller said. “That provides a firm underpinning for prices … I still think there’s a fair amount of runway in 2022 for more of what’s happening now" in terms of prices and buyer competition, he said, "but with less intensity because of higher rates."

Buyers in April are facing a far different borrowing environment than those whose sales closed in the first quarter. The average rate for a 30-year fixed mortgage during the first three months of the year was 3.8%, according to mortgage giant Freddie Mac. The 30-year fixed rate for the week ending April 28 averaged 5.1%, which was a slight dip from the previous week's 5.11% — the highest the rate had been since 2010.  -JL

Economists at Freddie Mac, a government-sponsored purchaser of home mortgages, expect rates to average 5% in the fourth quarter of 2022, according to a forecast published April 18. 

Richard Steinberg, founder and chairman of Nationwide Mortgage Bankers in Melville, said his company has seen an uptick in business in recent weeks with rates surging.

“I think people are afraid rates are going higher and they’re trying to lock in today while they can still afford the payments,” Steinberg said.

Long Islanders have a lot to consider when buying in today's real estate market. Newsday's Faith Jessie and Jonathan LaMantia discuss.


He expects homebuyers who are close to landing a home in a challenging market to accept higher monthly payments rather than prolonging their search, given the dearth of homes for sale.

“We have tons of people who are fully preapproved for mortgages and still cannot find houses,” Steinberg said. “That’s still our biggest problem as a company is not enough inventory.”

At the national level, mortgage bankers have seen a decline in demand. Mortgage applications for the week ending April 22 decreased 8.3% from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association, a Washington, D.C.-based trade group. Its index tracking mortgages used in home purchases fell 17% from the same week a year ago. Refinance applications plummeted 71% for the week ending April 22, compared with the same week a year ago, when rates were about two percentage points lower, the association said.

For sellers, the combination of factors that have led to higher mortgage rates, including inflation of consumer goods and the war in Ukraine, might be signals that it is the right time to list their home before demand wanes, said Ann Conroy, CEO of Douglas Elliman Long Island.

“We’re going to get to the point where sellers do start to list” more properties, she said. “There won’t be the buyer frenzy, but there’ll be buyer demand and then you’ll start to see that price appreciation will slow down or come to a pause.”

Higher prices out East

Some of the trends plaguing the rest of the Island are magnified on the East End. Home sales in the Hamptons fell by 22.4%, as the number of homes on the market plunged by 41.5% to 671 by the end of March, setting a record low for the second straight quarter.

“The way I think of the Hamptons these days is very similar to luxury markets around the U.S., which are hampered by a collapse in supply,” Miller said.

On the North Fork, sales fell by 37% to 114, as there were 26.4% fewer homes for sale by the end of March than there were that month in the previous year. The report said there were just 89 homes on the market by March 31.

Even in these high-price communities, where there are typically fewer buyers for each house, bidding wars have become more common. On the North Fork, 40.8% of all homes sold in the first quarter went for above the asking price. In the Hamptons, there were bidding wars in 26.5% of all sales during the quarter.

The end of bidding war mania?

While mortgage rates above 5% hurt housing affordability in the short term, Miller said he sees the prevalence of bidding wars — and buyers paying tens of thousands above list prices — as much more troubling. He’s not concerned about a housing bubble given tighter underwriting standards now compared with those during the housing crash in 2008.

The idea that half of Long Island homes are selling for above asking price “is not a sustainable condition,” Miller said.

Higher rates could deter some buyers from making a purchase, which in turn will keep homes on the market longer. 

“When that happens in larger numbers, prices level off,” Miller said. “In the long run, that’s a much better sustainable condition for the market. That’s why I think rising rates are one of the best things that could have happened given the condition the market is in right now.”

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