Long Island home prices break records in second quarter

Long Island home prices reached new highs in the second quarter as intense competition for homes pushed buyers to spend more, according to a report released Thursday.

The median price among sales that closed from April to June was a record $670,000 on Long Island, excluding the East End, according to the report from real estate brokerage Douglas Elliman and appraisal firm Miller Samuel. That was nearly 12% higher than in the same quarter a year ago. The firms report data for the Hamptons and North Fork separately from the rest of the Island.

In the Hamptons, the median sale price reached a new high of just under $1.9 million, 30.8% higher than the same figure a year ago. The number of sales also jumped 74% to 451 during the quarter.

Meanwhile on the North Fork, prices slipped slightly. The median deal sold for $963,000, 1.7% lower than in the previous year, as the number of listings jumped 49% at the end of June to its highest level since 2020.

The continued shortage of listings led to frequent bidding wars for homes. About 57% of homes on Long Island, excluding the East End, sold for more than sellers’ asking prices, which was just shy of the record of 59% set two years ago.

At the end of June, there were fewer than half as many available properties as there were in the same month five years ago, said Jonathan Miller, CEO of Miller Samuel. 

"It's making the housing market very difficult to navigate for buyers," Miller said. 

The second quarter did offer one brighter milestone for buyers. It was the first time in five quarters in which there were more houses on the market than the year before.

Some of the factors that are keeping homeowners from selling include the extremely low mortgage rates of the past decade that have locked owners into their current properties and the difficulty of finding a home to move into elsewhere on Long Island, said Tony Piscopio, senior executive manager of sales for the North Shore region at Douglas Elliman. That combination has kept the number of listings low on Long Island, he said.

"We still don’t have enough," Piscopio said. "The buyer pool is so large and that’s what’s making this so competitive. While [inventory] did increase for the first time annually, it hasn’t increased enough, and you still have that competitive atmosphere."

After several years of steady price growth, sellers have high expectations for how much they will get for their homes, and some are aiming for prices beyond what buyers will pay, said Nicole Burke, a real estate agent at Charles Rutenberg Realty in Plainview. After a few weeks, those sellers tend to drop their price.

Houses "stay on the market longer if they’re overpriced, but generally, they’re gone, and there’s a bidding war at times," Burke said.

Miller said he expects the supply of homes to continue growing, especially if the Federal Reserve moves to cut its benchmark rate in September, which could send mortgage rates lower. The average 30-year fixed rate was 6.77% for the week ending July 18, according to mortgage giant Freddie Mac.

The decline in mortgage rates could be gradual. Economists at Fannie Mae, the federally backed mortgage purchaser, said this week they expect the average 30-year fixed rate to fall to 6.7% in the fourth quarter of this year and down to 6.2% by the fourth quarter of 2025.

Lower mortgage rates could make it more attractive for homeowners to move. As the supply of houses starts to build up, there is more pressure on sellers to accept an offer testing a concept Miller calls "seller resolve."

"Seller resolve is weakening because you had an increase in inventory," he said. 

While that may lead to slower price appreciation, Miller doesn't foresee a pullback in prices. It could take three to five years for the number of listings on Long Island to return to pre-pandemic levels, he said. 

"The idea of a significant improvement in affordability for homebuyers in any scenario I can think of over the next year or two seems remote, unfortunately," Miller 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.