Long Island home sales get boost in May in positive sign for sellers

The number of Long Island home sales going into contract improved in May compared with the past few months, showing the local real estate market’s staying power despite rising interest rates.

In May, there were 2,467 pending sales, deals which had gone to contract but not yet closed, on Long Island. That was 13% higher than the same figure in April, according to new data released Wednesday by OneKey MLS.

“It looks like we’ve turned a corner,” said Richard Haggerty, CEO of OneKey MLS, referring to improving sales numbers. “It’s not a sharp turn and I don’t think it’s going to be significant in terms of a lot of activity, but we’re definitely starting to see a trend."

Pending sales in Nassau and Suffolk in May were still about 8% lower than in the same month a year ago. As recently as December, pending sales had been down 35% year-over-year.

Home prices fell short of 2022 peak levels in May but buyers haven’t seen substantial relief. The median sale price for closed sales in May was $665,000 in Nassau County, or 2.9% below the same figure a year ago. In Suffolk, the median was $550,000, which was 0.8% below last year’s level. Closed sales reflect market activity over the course of the spring, as it can take weeks or months to finalize a sale.

The median price for deals in contract showed the real estate market isn’t far from the record prices reached last summer. The median pending sale in Nassau was priced at $700,000, or 2.7% less than last year. The highest-ever median among closed deals for the county was $720,000 in July 2022.

The median pending sale in Suffolk was $575,000 in May, which matches the record for median closed price set last July.

A lack of inventory has played a major role in keeping prices high. There were 5,069 listings across the Island at the end of May, which was 21% fewer than in May 2022. In May 2019, before the pandemic led to a surge in demand, there had been more than 13,000 homes for sale.

Haggerty said Long Island homeowners looking to relocate nearby don’t have enough attractive options to choose from, which is leading them to stay put rather than put their houses up for sale.

“If they’re not seeing anything that strikes their fancy and they’ve got a great interest rate, there’s no motivation for them,” he said.

The average 30-year fixed mortgage rate was 6.43% in May, compared with 5.23% in May 2022. As of Thursday, the average was 6.71%, according to mortgage giant Freddie Mac. That has increased borrowing costs for potential homebuyers and made moving less attractive to Long Islanders enjoying mortgage rates around 3%. The Federal Reserve announced Wednesday it would not raise its benchmark interest rate after 10 meetings in which it hiked its rate to tame inflation but signaled further increases are likely.

 "Mortgage rates will likely move somewhat higher in the weeks ahead," wrote Robert Dietz, chief economist at the National Association of Home Builders, in commentary published after the Fed announcement Wednesday. 

The odds continue to be stacked against buyers. Months of supply, a measure of how long it would take to sell all the homes on the market at the current sales pace, was 2.1 at the end of May, which was down from 2.4 last year at that time. Five to six months of supply is typically needed to balance negotiations between buyers and sellers. 

That’s positive for homeowners who might not have been ready to sell during the past few years and are putting their homes on the market today, said Bryan Karp, an associate broker and team leader at Coldwell Banker American Homes in Smithtown.

“It still makes sense for people to sell because we haven’t seen much of a pullback in value,” he said. “Why not squeeze out every dollar you can and take advantage of that opportunity?"

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.