The Long Island housing market sees a cooldown as home sales dip more than 25%. Newsday business reporter Jonathan LaMantia discusses. Credit: Newsday

Long Island’s real estate market ended 2022 on a duller note than it started the year, with far fewer sales and much slower price appreciation.

The number of home sales dropped 25.3% on Long Island during the fourth quarter compared with the same period in 2021, according to new data from real estate brokerage Douglas Elliman and appraisal firm Miller Samuel. The firms report data separately for the Hamptons and the North Fork.

The median sale price among Long Island homes increased 3.5% to $590,000 during the period from October to December compared with the same period the year before. Prices had been rising at an 8.6% clip in the fourth quarter of 2021.

After several years of historically low mortgage rates, the market felt the jolt of higher rates as they more than doubled to end 2022, said Jonathan Miller, CEO of Miller Samuel. The average rate for a 30-year fixed loan was 6.42% in the last week of the year. It stayed above 6% throughout the fourth quarter, peaking at 7.08% in late October and again in early November.

What to know

  • Long Island home sales slowed down in late 2022, with 25% fewer sales recorded in the fourth quarter, according to Douglas Elliman and Miller Samuel.
  • The median sale price was $590,000 from October to December, or 3.5% higher than it has been a year earlier. The data excludes East End sales which are reported separately.
  • There were 52.6% fewer sales in the Hamptons, as the area struggles with a shortage of listings.

“This is the reset coming off a heady period,” Miller said. “The market seems to be trying to normalize."

Jamie Gorman, a real estate agent for Charles Rutenberg Realty in Plainview, said more buyers have emerged in the first few weeks of 2023 after a slow end to 2022.

“It was the quietest December I’d ever had,” she said. “It felt like everyone was at a standstill.”

The reset was even more pronounced in the Hamptons, where there were only 251 closed sales in the fourth quarter, which was 52.6% lower than in the same period a year ago. That represents the fewest sales since the second quarter of 2009.

The median sale price in the Hamptons fell 6.3% year over year to $1.275 million during the fourth quarter.

Miller said one factor contributing to the drop in sales is how many deals were reached in the months after the COVID-19 pandemic started. About 800 homes sold in the Hamptons during the fourth quarter of 2020.

“In the early part of pandemic, sales in the Hamptons were disproportionately high because you had the phenomenon of people in the city moving out there,” he said. “With that disproportionate demand, I think future demand was poached. Now, we’re experiencing the aftermath of that.”

The North Fork fared slightly better. The number of home sales fell 36% year to 103 during the fourth quarter, while the median price increased 10.6% to $995,000 in the fourth quarter compared with a year ago.

Even as sales have dropped off, the number of homes available to buyers is still limited. The number of listings at the end of December was 5,019 on Long Island, excluding the East End, which was the third-lowest quarter in the 20 years Miller Samuel has tracked the stat.

“With inventory where it is, we have more buyers than inventory,” said Todd Bourgard, Douglas Elliman’s CEO overseeing its Long Island offices.

That has helped sustain competition for homes and propped up prices. About 43% of sales went for above asking price on Long Island during the fourth quarter. That’s down from a high of 59% in the second quarter of 2022.

“If you’ve got sellers chasing the old prices, the houses are going to sit on the market for a lot longer,” said Jeffrey Jimenez, a real estate agent at eXp Realty who markets homes in the Tri-Hamlet area around Mastic. “Sellers that are realistic … can create a high demand for a listing” based on how they set the price.

Miller said that many Long Island buyers and sellers may look at 2023 as a year of disappointment, with sellers failing to receive much more than their neighbors’ recent sales. Meanwhile, the lack of supply won’t provide buyers much relief on prices.

“When the dust is settled on 2023, I suspect we’re looking at a market moving sideways as opposed to seeing consistent price growth,” Miller said.

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