Long Island home prices climbed nearly 13% as some signs point to market cooling

Long Island homes sold at prices near all-time highs in September, but there are subtle signs the market is cooling from the red-hot seller’s market that started as pandemic restrictions eased last year.

In Nassau County, the median sale price was $665,000, or 12.9% higher than in September 2020, according to new data released Thursday from OneKey MLS, the listing service that includes Long Island. In Suffolk, the median price also rose 12.9% to $525,000. Those prices were just shy of all-time highs set in recent months.

Fewer homes were sold across the Island in September than in the same month a year ago. That represents the first year-over-year decrease in sales in the past year. In Nassau, the number of properties sold dropped by 6.6% to 1,344 last month compared with September 2020, when closings stalled by the pandemic were finalized. Suffolk saw a similar decline, with sales last month falling 10.7% short of the pace a year earlier.

While brokers describe a shift in the market, it's not yet providing noticeable relief for buyers. Whereas earlier this year, sellers had dozens of offers to choose from, now there are just a handful of bidders for each house. That’s still enough competition to drive up prices, but there’s less of an incentive for sellers to wait on a bid that is substantially above asking price.

Angela Prince, a real estate broker and owner of Prince & Associates Realty Group in Bay Shore, said she’s less likely to advise homeowners to wait for more offers and test the market. She’s noticed dwindling lines at open houses compared to earlier in the year, but it hasn’t translated to any discounts for buyers.

"From the outside, you’ll see no change," Prince said. "From the inside, if I’m looking at it, you’re starting to get less offers."

Prices down on pending sales

The median price of pending sales in Nassau County fell for the fourth straight month to $635,000, demonstrating a leveling of prices in the area, said Jim Speer, CEO of OneKey MLS. Pending sales are seen as a more up-to-date indicator of market activity because it can take several months to finalize a deal.

Speer said the number of homes available for sale remains low, which gives sellers an edge. There is 2.8 months' worth of supply in Nassau and 1.9 months' in Suffolk based on the number of pending sales in September. Buyers and sellers are on a more even footing when there is at least five months' of supply available, Speer said.

Despite annual gains, the sustained month-over-month decline in the median price of pending sales in Nassau suggests the market won't set new records in the coming months as it did over the summer.

"With low inventory, we would [expect to] continue to see prices sneak up, which they’re not," Speer said. "We might have reached near the top of what people are willing to pay."

Speer said homes have continued to sell despite high prices because of low mortgage rates that have held down buyers’ potential monthly payments.

Mortgage rates creeping up

Rates have begun to increase. The average 30-year fixed mortgage rate was 3.05% during the past week, which was the highest it has been since April, according to mortgage giant Freddie Mac. The average was 2.86% about a month ago. The rate is expected to reach 3.6% by mid-2022, according to a forecast by the National Association of Realtors.

"As long as it’s just a slow creeping, I don’t think it would affect it that much," Speer said of rising rates’ effect on local buyers’ behavior.

Jamie Gorman, an associate broker at Charles Rutenberg Realty in Plainview who works with buyers and sellers, said the leveling of prices isn’t being felt in individual deals.

"My own theory is buyers are so frustrated and have been through so much they assume they have to go in with these aggressive-market offers." she said. "Everyone is still expecting it to be the way it was."

Gorman, who often markets properties in the Plainview and Syosset areas, said homeowners routinely reach deals in the first weekend they list their properties. Instead of as many as 18 offers on a single house, she’s now seeing four or five bids.

"If you don’t go to see it the first weekend it’s on, it’s gone," Gorman said. "This market has been really hard for buyers. I have so many buyers that are in tears all the time."

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.