The prices of homes on Long Island reached record highs in July despite higher mortgage rates. NewsdayTV's Jasmine Anderson and Newsday real estate reporter Jonathan Lamantia discuss.

The median home price in Nassau County hit a record in July, at $725,000, surpassing last year’s high-water mark in a sign that steeper mortgage rates haven’t pushed local housing prices lower.

The median in Nassau rose 0.7% above the previous record of $720,000 in July 2022, according to new data from OneKey MLS.

In Suffolk County last month, the median price was $575,000, which matched the record price for the area reached last July.

The key driver of home prices has been a shortage of available homes on the market. There were 5,089 listings across Long Island at the end of July, which was nearly 30% fewer than a year ago.

WHAT TO KNOW

  • The median price among homes sold in Nassau County last month was a record $725,000.
  • In Suffolk County, the median matched a record $575,000.
  • While prices remain high, the number of home sales in July fell 23% across Long Island last month compared with a year ago. Experts pointed to rising mortgage rates and a shortage of homes for sale as driving the decline. 

The combination of high interest rates and meager inventory has created an environment in which fewer Long Island homeowners want to put their homes on the market, said Richard Haggerty, CEO of OneKey MLS.

“With the dire lack of inventory, there is absolutely no motivation for sellers to list, but there are buyers out there when they do list, and that fuels the higher median sales price,” he said.

In July 2019, the last comparable month before the pandemic kicked off a surge in demand, there were more than 13,000 homes on the market.

But while the prices may be the same or higher as last summer, far fewer deals are happening. The number of sales that closed in July fell 23% across Long Island to 1,986 compared with the same month a year ago.

Limited options for buyers have continued to toughen competition. Nicole Burke, an associate broker at Charles Rutenberg Realty, said she has been surprised to find buyers she’s working with running into similar levels of competition at different price points. One client has faced bidding wars while looking at houses priced around $460,000 in the Copiague area, while another is dealing with the same for houses nearly double the price, about $900,000, near Baldwin.

“It’s been challenging, especially [to get] buyer clients’ offers accepted,” she said. “We’ve gone close to $80,000 over asking price at times and still their offers are being outbid.”

Potential homebuyers on Long Island are facing both rising prices and rising interest rates, which increase monthly mortgage payments. The average mortgage rate for a 30-year fixed loan was 6.96% last week, which was up from 5.22% a year ago, according to Freddie Mac.

Higher interest rates have made homes much less affordable. A Long Island homebuyer taking out a $500,000 mortgage this year would pay 20% more, or $3,313, than they would have with last year’s rate for the principal and interest portion of their loan, according to a Newsday analysis using Bankrate.com’s mortgage calculator.

“Last year was a very different market. We had much more appealing interest rates, and when you have lower interest rates, you have more buyers eligible to buy a home,” said Kieran Rodgers, a real estate agent at The Agency in Huntington. “With the increases, sellers don’t want to sell because they have a low interest rate” on their mortgages.

Selling fast

But buyers’ interest is still strong, Rodgers said. He said his listings below $700,000 are usually in contract in about a week after listing, while homes going for above $1 million can sell in about a month if they’re priced well to attract buyers.

For pending sales that were agreed to but did not close in July, the median in Suffolk was $593,750, or 8% higher than in July 2022. Nassau’s median pending sale matched closed sales at $725,000.

Nationally, there are signs that higher rates are weighing on demand in early August, said Mike Simonsen, president of Altos Research, which tracks the U.S. housing market.

“This is a different trend from January through June when demand was higher than we expected,” Simonsen said in a video Monday describing market trends. “It was mid-June when it looked like mortgage rates might continue to ease down but then the opposite happened. Rates rose from 6% to 7% and that affordability impacts buyers.”

Haggerty, of OneKey MLS, said he is watching to see whether the Federal Reserve will hold off on raising rates any further. The Fed has raised rates 11 times since March 2022, hiking a key borrowing rate to its highest point in 22 years with the goal of slowing consumer price increases. Mortgage rates tend to rise during periods of inflation and fall when investors fear a recession.

With an assist from the Fed, Haggerty believes Long Island could see more homes hit the market and sell in the fall after the typically strong spring selling season failed to produce as many deals as usual. But buyers waiting for a serious price correction will likely be disappointed.

“I don’t see a correction happening now,” he said. “The lack of inventory is just not going to let prices go down.”

Trump returns to court … Sexually transmitted infections rise on LI … What's up on LI Credit: Newsday

Updated 38 minutes ago Bernagozzi in court ... Free bus rides for Port Washington students ... LIU Post Friday classes ... $40 Citi Field sandwich

Trump returns to court … Sexually transmitted infections rise on LI … What's up on LI Credit: Newsday

Updated 38 minutes ago Bernagozzi in court ... Free bus rides for Port Washington students ... LIU Post Friday classes ... $40 Citi Field sandwich

Latest Videos

Newsday Logo

ONE-DAYSALEUnlimited Digital Access25¢ for 5 6 months

ACT NOW

SALE ENDS SOON | CANCEL ANYTIME