Long Island home prices reach new highs as bidding wars break out in 46% of sales

Long Island home prices set new records this spring as bidding wars broke out in nearly half of sales, a new report shows.

In 46% of transactions in Nassau County and western Suffolk County from April through June, buyers paid more than the final listing price, indicating they got into bidding wars, said Jonathan Miller, president and CEO of appraisal company Miller Samuel. That’s more than twice as many bidding wars as four years earlier, when 20% of homes sold for more than the listing price, he said.

"These markets are essentially rocket ships," Miller said. "The chronic low supply of inventory and the unusual affordability that low mortgage rates have brought have thrown asking prices out the window."

Homes sold for a median price of $555,000 in Nassau County and western Suffolk County from April through June, up 18% from a year earlier and the highest on record, Miller Samuel and brokerage Douglas Elliman said in a report to be released Thursday.

Hamptons sales also reached a new high, with the median price jumping 30% year-over-year to $1.4 million in the second quarter, the companies reported.

On the North Fork, the median price soared by 33% to $790,000, the second-highest price on record.

Bidding wars drove up prices in 21% of Hamptons sales and 35% of North Fork transactions, Miller said.

On Long Island, excluding the East End, there were 6,754 homes listed for sale at the end of June — up 22% from the end of March, but down sharply from the peak of 26,145 listings in spring 2008, Miller said.

It would take 2.6 months to sell all the homes on the market at the last quarter’s pace of sales, the report shows. A balanced market has a five- to eight-month supply, brokers said.

For many buyers, "the biggest thing that's stopping them is inventory," said Ann Conroy, Long Island CEO for Douglas Elliman. "Even though we have more inventory, it's still not where we need to be."

In addition, she said, near-record-low interest rates are "a huge factor" in many home purchases, along with the strong economy and job market.

Conroy said she believes price increases will slow down, but she does not expect housing values to fall anytime soon, especially since interest rates are expected to remain low at least until next year.

The average mortgage rate was 2.88% last week, mortgage giant Freddie Mac reported.

"As long as the demand is there for a home and the supply is not ample, I think there’s upward pressure on pricing," Conroy said.

In the Hamptons, brokers racked up more than $2.1 billion in sales this spring, a 90% increase from spring 2020, the brokerage Brown Harris Stevens of the Hamptons said in a report to be released Thursday. The number of homes selling for at least $5 million more than doubled over the same period, from 35 to 91, the report shows.

The "frenzied activity" that persisted from last summer through early this year has started to ease, said Robert Nelson, executive managing director at Brown Harris Stevens.

"We still see multiple offers at all price points," he said. But, he said, "the prices need to be more accurate now. You cannot stick on this quote-unquote COVID price and say, ‘let’s hope, let’s see.’"

By Maura McDermott

maura.mcdermott@newsday.commauramcdermott

Maura McDermott covers education. Since joining Newsday in 2012, she also has worked on the investigations team and covered real estate and the business of health care.