Long Island home prices: Nassau sees drop in June, while Suffolk flirts with record high

Long Island’s shortage of homes for sale deepened in June, with homebuyers shaking off elevated mortgage rates to make deals and prop up prices.

The number of homes on the market fell by 28.7% by the end of June compared with an already low level a year ago, driving competition among buyers.

The median price among closed sales in Suffolk County last month was $570,000, or 1.8% higher than a year ago, according to new data from OneKey MLS. That’s nearly as high as last July, when the median in Suffolk hit a record of $575,000.

In Nassau County, the median sale last month went for $695,000, which was 3.1% below the mark from June 2022. A year-over-year decline of 3.1% is the largest recorded in Nassau since April 2012. But while prices in Nassau aren’t repeating last summer’s records, they have climbed in four consecutive months.

“There’s definitely a little softness here, but, to me, it still doesn’t rise to the level of a price correction,” said Richard Haggerty, CEO of OneKey MLS.

Data on pending sales showed prices were higher among sales that were in contract but had not yet closed in June. The median price for pending sales in Suffolk County was $592,500, which was 4.1% higher than a year ago. In Nassau, the median rose 1.6% to $710,000.

Prices have remained high even as rising mortgage rates have hurt affordability. The average mortgage rate for a 30-year fixed loan was 6.71% in June compared with 5.52% a year earlier, according to Freddie Mac. The average was 6.96% for the week ending Thursday. Just 18 months ago the average was around 3%. 

“The fact that home prices didn’t crash even though mortgage payments are so dramatically higher than they were just 18 months ago, that’s just remarkable,” said Mike Simonsen, president of Altos Research, which tracks the real estate industry, in a video released this week.

The state of the market is surprising because as mortgage rates rise, fewer potential buyers can afford homes and the available supply should expand, giving buyers more leverage in negotiations. But on Long Island there were only 4,999 homes for sale at the end of June. In June 2019, there had been around 13,500.

The lack of listings is due in part to homeowners choosing not to upgrade or downsize because they would need to trade in a mortgage with a historically low rate for one at nearly 7%.

'Why would we move?'

“The reason there’s no inventory is that the people who want to sell are not sure they’re going to get a good house that they’re expecting at the price,” said Bobbie Gujral, a real estate agent at Property Professionals Realty in Hicksville. “I’m working with a buyer who wants to sell his house but when they’re looking at other homes, they’re like, ‘Our house is much better. Why would we move?”

 Trevor Kemp, a real estate agent at East End Luxury in Southold, said higher mortgage rates have slowed down the pace of the market. Sellers have been reluctant to adjust their price expectation, and buyers are wary of taking out home loans with mortgage rates near their highest level in 20 years. 

"They’ve paid these interest rates before," Kemp said, noting that today's mortgage rates are far from unprecedented. "The only difference is they’ve seen it low, and it’s just like when you see a sale, you wait for the sale to come back. The sale’s not coming back anytime soon, so everyone’s going to have to keep moving forward."  

Haggerty, of OneKey MLS, said economic data this week that showed U.S. inflation slowing to 3% over the past 12 months, the lowest rate since March 2021, could be a first step in bringing more homes on to the market. The Federal Reserve has hiked its benchmark interest rate aggressively over the past year to tame inflation and it could begin to end that strategy soon if inflation is under control.

“If we do start to see some positives connect that lead to lower interest rates, that could be what finally jolts the market and jolts sellers into listing their homes,” Haggerty 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.