After appearing to slow down this spring, Long Island home prices picked up steam during the summer months, reaching new highs in the third quarter, according to new data released Thursday.
The median sale price on Long Island, excluding the East End, rose 3.2% to $640,000 during the quarter compared with the same period in 2022, according to data from real estate brokerage Douglas Elliman and appraisal firm Miller Samuel.
Long Island set price records across every subcategory the report measures. The median price for Nassau County, Suffolk County, single-family homes and condos all hit new highs in the third quarter.
“The first and second quarter, generally, we were seeing prices slip year over year,” said Jonathan Miller, CEO of Miller Samuel. “Now, it’s rising."
WHAT TO KNOW
- The median home price on Long Island, excluding the East End, rose 3.2% to $640,000 in the third quarter, according to Douglas Elliman and Miller Samuel.
- The median sale in the Hamptons was $1,417,500, 11.4% lower than the same period a year ago.
- LI home prices didn't fall even as mortgage rates climbed above 7% over the summer, but higher rates have meant fewer transactions.
While sellers are receiving top dollar, there are far fewer of them than in years past. The number of sales on Long Island, excluding the East End, fell 17.1% during the third quarter compared with a year ago.
“It appears that we’re stuck in terms of transaction volume not rising to more normal levels because of the combination of reduced affordability from higher rates and the chronic lack of supply,” Miller said.
Meanwhile in the Hamptons, the median price dropped 11.4% to $1,417,500 in the third quarter, down from a record $1.6 million in the third quarter of 2022. The number of sales in the Hamptons fell 13.2% from a year earlier.
Miller said he views last year’s record high median price as an outlier and noted the third-quarter median price still represents a 65% increase from the third quarter of 2019.
The North Fork fared better. Its median price rose 2.1% to $999,950 in the third quarter. The region has seen prices soar since the pandemic started. Back in the third quarter of 2019, the median sale on the North Fork went for $629,000.
Prices have continued to rise even as mortgage rates climbed during the third quarter. The average rate for a 30-year fixed mortgage from July to September was 7.04%, up from 5.62% during the third quarter of 2022, according to Freddie Mac. Rates have increased more in October, with the average at 7.63% for the week ending Oct. 19.
Higher mortgage rates mean homebuyers stand to pay hundreds of dollars more each month in interest costs for housing.
How can home prices keep going up even as homeownership has become more expensive and moved some would-be buyers to the sidelines? The answer is a stubbornly low number of listings, which is fueled in part by homeowners who want to stay put and hold on to a low mortgage rate, Miller said.
“It just shows you despite near-8% mortgage rates that inventory is really distorting the housing market,” Miller said.
There were 4,550 homes on the market on Long Island, excluding the East End, at the end of September. That is about two-thirds fewer homes than were up for sale during the third quarter of 2019, before the pandemic led to a surge in demand.
“It’s keeping those prices up there,” said Todd Bourgard, Douglas Elliman’s CEO of brokerage for the Long Island, Hamptons and North Fork regions.
But the recent upward trend in mortgage rates will make it harder for Long Islanders to outbid one another and still afford their monthly payments.
“I do believe that affects the purchasing power of a lot of Long Island buyers,” he said. “They’ll only be able to go so high on these homes.”
Those bidding wars haven't abated yet. About 55% of all sales in the third quarter went for above asking price.
Maria Wilbur, a real estate agent at Keller Williams Greater Nassau, said a listing she had for an expanded Cape in Seaford this month received 12 offers, including one that was $80,000 over the asking price. She said she has been counseling hopeful buyers she’s working with to resist the temptation to pause their search.
“I told them, ‘You cannot wait. You think it’s rough out here now, you wait for that interest rate to drop just a half a point. There will be people coming out of the woodwork that you didn’t even think you were competing against,’ ” she said.