Long Island home prices rise at slower pace in October

Long Island’s fast-rising home prices showed signs of slowing in October. But buyers can still expect stiff competition to find a house given the shortage of listings on the market.

The median price among single-family homes sold last month in Nassau County was $795,000, 7.4% higher compared with October of last year, according to data released Monday by OneKey MLS, the multiple listing service that covers Long Island.

The median fell 2.5% compared with September, when it was $815,000.

Historically, prices have fluctuated seasonally, with the median falling in the colder months and rising through the spring and summer.

In Suffolk County, the median price rose 8.9% to $670,000 in October, compared with a year earlier. That price was lower than the record $680,000 reported in August and September.

While prices are still near record levels, the pace of appreciation has slowed compared with earlier this year, when the median price in both counties increased more than 10%.

“My gut tells me we are hitting the peak. There just comes a point where it’s tough to believe it can go much higher,” said Richard Haggerty, CEO of OneKey MLS. “I’m not saying we won’t have incremental increases, but I can’t envision any significant increases in median prices.”

Haggerty said he expects   the shortage of available homes to continue into the new year as the holiday season approaches and fewer homeowners put their houses on the market.

Competition for homes

Melanie Kalmaer, a real estate agent at Bona Fide Fine Homes & Estates in Nesconset, said she recently got seven offers, including multiple that were all cash, on a home priced just under $1 million in East Hills. The home is likely to be gut-renovated or knocked down and rebuilt, she said, and it attracted a mix of builders and home seekers.

Because of the level of competition, Kalmaer has advised buyer clients to look at homes priced significantly below their budget. For example, she told a buyer who could spend a maximum of $560,000 to look at homes priced at $450,000 and below.

That’s due in part to a trend of agents pricing properties lower than they expect to sell them to increase interest from buyers, she said. 

“You need to be prepared to go over $100,000 [more] than they’re asking,” she said. “The list price is no more because it’s a free-for-all. There’s not enough inventory for all the people to buy and interest rates, once they go down, there’s going to be even more buyers." 

In October, the number of single-family homes on the market across Long Island dropped 5.2% compared with last year, when availability was already low. There were about 4,700 houses on the market at the end of the month, according to OneKey MLS.

There were fewer than half as many houses available at the end of October as there were at this time in 2019 before the pandemic led to a surge in demand for suburban homes.

“From my perspective, we need more inventory,” Haggerty said. “It’s that simple.”

While houses on the market are still getting plenty of interest, there’s a sense that demand is not as hot as it has been over the past two years, said Jared Garcia, an associate broker at Weichert Realtors in Farmingdale. Garcia said agents in his office might expect to see six or seven buyers at their open houses, when last year they would have expected double that number.

“We’re still getting offers on our listings and they are all selling, but it’s not the frenzy we saw in 2022,” Garcia said. 

The number of transactions that closed in October fell 8.4% in Nassau County, compared with October 2023.

In Suffolk, closings increased 5.2% compared with the same month a year ago.

“Suffolk continues to be a little more robust than Nassau” in terms of both sales and available inventory, Haggerty said. 

Mortgage rates a factor

One impediment to the market has been elevated mortgage rates. Starting in late September, the average 30-year fixed rate rose for six straight weeks before leveling off last week, according to mortgage giant Freddie Mac.

As of last Thursday, the average was 6.78%. That’s an improvement from last year but more than double the 3.1% average at this time in 2021. The steep rise in rates has added hundreds of dollars to homebuyers’ potential mortgage payments.

The difference in today’s mortgage rates, compared with the low rates in the recent past, have discouraged homeowners from selling and then buying elsewhere, which could mean increasing their monthly housing payments. Plus, the diminished level of inventory means they might not find an attractive option that meets their needs.

That environment has made it less attractive to upgrade to a larger house, Garcia said.

“The move-up seller that’s looking in a similar neighborhood, just for a different house, they’re on the sidelines, and I don’t think they’re moving anytime soon, which is creating a little bit of an inventory problem,” Garcia said.

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.