Long Island home prices set records in August, and some of the highest mortgage rates in 20 years did little to slow down their momentum.
The median price in Nassau County rose 4.3% to $730,000 for sales that closed in August compared with a year earlier, according to new data from OneKey MLS. The previous record median price, set in July, was $725,000
In Suffolk, the median price jumped to $590,000, an increase of 5.2% from the same month a year ago. It shattered the previous record of $575,000 set in July 2022 and matched this July.
Two related factors have helped local prices reach new heights.
First, there is a lack of available homes for sale, and multiple buyers often compete for the same attractive listings. Second, the recent rise in mortgage rates has made homeowners reluctant to move and give up home loans they obtained in the past at lower rates.
Those Long Islanders who want to either find a larger home or downsize nearby face meager options if they go house-hunting.
“We’re still very much suffering from a lack of inventory,” said Richard Haggerty, CEO of OneKey MLS. “If you’re going to put one finger on it, it’s interest rates, because it’s keeping sellers where they are. There’s no strong motivation for sellers to list their properties.”
There were 5,025 homes on the market at the end of August, which was down nearly 26% from the same month a year ago. That is the lowest inventory level for August in at least 30 years, according to OneKey MLS data.
The supply of for-sale housing has never recovered from the pandemic era surge in demand, when the rise of remote work and a desire for more space led to an influx of New York City residents buying on Long Island.
“We hit such a high after the pandemic that trying to find that normalcy has just been a challenge,” Haggerty said.
Beyond soaring prices, a drastic increase in mortgage rates over the past two years has increased new homeowners potential monthly payments by hundreds of dollars. The average rate for a 30-year fixed home loan was 7.18% this week, according to Freddie Mac. Last year at this time, it was 6.02%. Two years ago, the mortgages were around 3%.
What rates have done is reduce the number of transactions. There were 1,171 closed sales in Nassau last month, which was down 16.1% from a year ago. In Suffolk, the number of deals was down to 1,334, which was 21.6% lower than a year ago and the lowest for August since 2014.
"People don’t want to let go of an interest rate of 2% or 3% or 4%. It’s got to be well worth it for them to move," said Tim Galligan, who leads a team of agents at Keller Williams Point North in Woodbury.
That inventory environment has kept up competition, including an offer Galligan’s team received last week that was $100,000 above the asking price. He said agents on his teams sometimes limit showings on a property to an open house on a single day to get as many people as possible at a home at the same time.
“The idea is to create as much of a sense of urgency as possible,” Galligan said.
The rally in prices might finally be ready to fade. The median price for pending sales in Nassau County — deals that were in contract but had not yet closed — was lower than for closed sales, at $705,000. The median in Suffolk for pending sales last month was $590,000. Those price levels give a sense of more recent activity from August, while data on closings represent deals that may have been agreed to in June or July.
Vanessa Gonzalez, a real estate agent at Realty Connect USA in Hauppauge, said she has started to sense a subtle shift in buyers since mortgage rates rose above 7%. At that mortgage rate, some potential buyers can no longer afford to purchase a home while others are taking a break from their search with the hope rates will move lower.
Now that buyers can face a $4,000 monthly payment for a ranch home, including taxes and insurance, they feel a greater need to negotiate, she said.
“I have seen there are less people out because of the rate in the last month,” Gonzalez said. “There is [still] a very large group of buyers, but it’s taking them longer to decide which house because when they come up with the monthly payment they know it’s not going to be as easy” to afford.