Long Island had fewest homes for sale in 40 years in December, keeping prices elevated

Long Island homeowners were frozen in place last month, as high mortgage rates deterred them from listing their homes and the number of for-sale listings fell to its lowest level in 40 years at the end of December, according to data from OneKey MLS.

There were just 2,250 homes for sale in Suffolk County, which is the fewest counted at the end of a month since at least 1980, according to OneKey MLS. Nassau’s listing total was 1,735, which is the fewest on record since December 1983.

Richard Haggerty, CEO of OneKey MLS, said he believes that low inventory of homes has been a consequence of ballooning mortgage rates and a hangover from the surge in sales that happened in 2020 and 2021. Homeowners have been reluctant to list their homes and give up very low mortgage rates from past years for more expensive debt.

He is optimistic that signals from the Federal Reserve that it plans to cut its benchmark interest rate this year will lead to more homes hitting the market.

“I don’t think it’s going to continue into 2024. Sellers are going to be looking at a more consistent interest-rate environment. They may have been holding off until that happened,” Haggerty said. “Now, I think they recognize that rates are going to improve, not overnight and not substantially, but they will be stable enough where they can now make a move if they’ve been contemplating it.”

The median sale price last month was $705,000 in Nassau County, which was 8.5% higher than in December 2022. That’s down from a record $735,000 in September. Changes in home prices are typically measured year-over-year to account for seasonality in the real estate market.

In Suffolk County, the median sale price among closings in December was $595,000, or 9.6% higher than in the same month a year ago. The Suffolk median peaked at $600,000 in October and November.

That level of price appreciation is significant given the steep rise in mortgage rates in the fall. The average rate for a 30-year fixed home loan was 6.82% in December, according to mortgage giant Freddie Mac. The average peaked at 7.79% in late October. Two years ago in December, the average stood at 3.1%. The latest rate, as of Jan. 11, was 6.66%.

“I don’t think the interest rates had a dampening effect on buyers at all because of inventory,” Haggerty said. “When something came on the market, and it was priced competitively, it was getting snapped up.”

But with sellers hesitant to test the market, fewer sales were recorded in December. There were 1,779 closings across the Island last month, which was 17% fewer than in December 2022. It was also the fewest closings since December 2011.

“We really did start out [2023] in a pretty bleak place,” Haggerty said of low sales activity. “It mitigated as the year progressed but we never really saw any substantial improvement.”

Scant options

Buyers hoping to find a home in a certain area have many fewer options than in the past. Last Friday there were 53 homes available in the Town of Huntington, which was less than half the 122 that were available at the same time in January 2019, said Melissa Stark, an associate broker and sales manager for Daniel Gale Sotheby’s International Realty in Huntington and Northport.

“There’s a lack of available standing inventory,” she said. “If inventory comes on and it’s great, it’s gone.”

After a slow December, Stark said there is more activity this month as slowly declining mortgage rates motivate homebuyers to resume their searches.

“We’re definitely starting to see a lot of buyers come back into the market as rates start to trend downward,” Stark said. “The buyers that have been on the sidelines, definitely through the month of December, have really come out in full force these first couple weeks of January.”

Jonathan Chandler, a real estate agent at Compass who works in both Nassau and Suffolk, said there are still plenty of buyers looking for homes despite elevated mortgage rates.

He said there were 15 to 20 buyers at an open house he held last Saturday in Wheatley Heights and the seller is considering multiple offers just a few days after the house hit the market. For buyers who can't stand out by outbidding others, it’s important to be among the first to put in an offer or view a property, he said.

“You need to be very aggressive in this market still,” Chandler 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.