A home for sale in Southampton. Prices on the East...

A home for sale in Southampton. Prices on the East End dropped 22 percent. (April 20, 2011) Credit: Randee Daddona

The surprise on Long Island's first-quarter home sales was in the Hamptons-North Fork market, where prices and sales fell -- the opposite of what happened a year ago -- a new report said.

The 486 closings meant a 22 percent drop from a year ago, and the median home closing price of $622,500 was also a 22 percent drop, according to a report from Prudential Douglas Elliman Real Estate. At this time last year its report touted a 142 percent jump in closings from the previous year and a 32 percent jump in the median closing price.

Two big Hamptons brokerages said a spike in sales late last year led to a breather in the first quarter. People had bet -- wrongly, it turned out -- that Congress and President Barack Obama would not extend the Bush-era tax cuts, leading to a hefty capital gains tax on home sales, the brokers said.

"A lot of people anticipated that they [tax cuts] were going to expire and put their houses on the market and took deals," said Peter Turino, president of Brown Harris Stevens of the Hamptons, whose first-quarter report also showed similar drops.

He said buyers are waiting for prices to go down more but predicted they won't have the patience to do so for much longer. "Waiting is boring," he said.

This on-off activity in the Hamptons-North Fork market suggests the wealthy may not be buying into the recovery. About 20 percent of sales there were $1 million-plus homes in the first quarter, down from 40 percent a year earlier, data show.

"Deals weren't coming together like they were in mid- 2010," said Paul Brennan, head of Prudential's Hamptons market. "There was no reason for them to do so. I think people were putting their fingers up and testing the economy to see where it's headed."

But there were reasons for not making deals, especially the weather, vastly underestimated as a mover and shaker in Hamptons real estate, Brennan said: "When spring breaks, people's minds begin to come from the city out to the Hamptons. When it's the frozen tundra, nobody wants to move."

He said the weather and pent-up demand are why he's seeing more activity now, including a $20-million-plus deal that just closed and two in the wings.

For the rest of the Island, the changes from a year ago were barely perceptible. The median closing price of $350,000 was the same a year ago, the report said, while the 3,841 closings meant a .7 percent tick up from the 3,814 last year.

Tempering those numbers are high unemployment rates and changes in the federal government's home financing system, said Manhattan-based appraiser Jonathan Miller, who compiled the data for Prudential.

"The way I would characterize it is stable but fragile," he said. "It's encouraging to see stability, at least for the moment."

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