Long Island home sales have fallen more than 20% in the past year

Long Island home sales fell more than 20% in July from a year earlier, with the effects of rising mortgage rates becoming more evident even as prices hit all-time highs.

There were 1,386 sales completed in Suffolk County last month, down 22.2% from July 2021. In Nassau, 1,104 transactions were completed in July, down 23.6% compared to the previous year, according to the latest data from OneKey MLS.

Yet prices have yet to be affected. The median sale price in Suffolk County hit a record high of $575,000 in July, up 9.5% from the median a year ago, and up from $560,000 in June. In Nassau, the median price was $720,000, matching the record set in June and up 7.5% from July 2021. OneKey MLS reports prices in nominal terms, meaning they don’t are not adjusted for inflation.

“Our market is still strong, as we can see from the prices, but it’s showing signs of slowing down,” said Jim Speer, CEO of OneKey MLS. “The number of sales is a little less than I would have thought.”

The pending sale price data suggests a brighter outlook for buyers in the months ahead. The median price among homes that were under contract in July but had not yet closed was $680,000 in Nassau County. It has fallen for two consecutive months. The same is true for the median pending price in Suffolk County, which was $540,000, down from $562,250 in June.

“It looks like it’s starting to slow down a bit,” Speer said. “If this happens for a third month in a row, then we can say that it looks like prices are not only stabilizing and could go down a bit, which you obviously don’t see in the closing prices yet.”

Pending sales provide a more up-to-date view of market conditions, as sales can take several months to close. There is no guarantee that transactions will be finalized, however.

The extreme shortage of homes for sale on the island has helped to support prices as listings remain well below 2019 levels before the pandemic triggered a housing boom. There were 3,325 registrations in Nassau at the end of July, down 15.5% from the same month a year earlier.

Suffolk buyers were luckier with 3,913 homes for sale at the end of July. This is a 5.8% increase from July 2021 and the highest total since October 2020.

Rising mortgage rates this year have made it more expensive for buyers to finance a purchase and put others out of the market. The average 30-year fixed mortgage rate was 5.22% for the week ending August 11. A year ago, the average was 2.87%, according to mortgage giant Freddie Mac.

The National Association of Realtors said on Friday its U.S. housing affordability index hit its lowest point in June since 1989 based on household incomes, higher mortgage rates and record house prices.

Speer said these factors, along with high levels of inflation, have affected purchasing power.

“You look at what you can afford for a house, and when interest rates were 3%, you could afford more than you could when they were 5%,” Speer said. “If my monthly amount that I spend on gasoline has increased by $100, or the number [spent] on grocery bills, it all comes into play when I’m looking to see what I can afford for a payment.

Buyers took advantage of a slower market pace. Months of supply, which measures how long it would take to sell all homes given the pace of ongoing sales, was 2.9 months across the island in July. That was up from 2.5 months in June. It takes about five months of supply to balance negotiations between buyers and sellers, Speer said.

“That number, while it’s increased, we need it to be more equal, which we’re still a long way from,” Speer said.

Some owners interested in selling are having a hard time adjusting to the changing market, Nancy Jarvis, associate broker at Daniel Gale Sotheby’s International Realty told Carle Place.

“You have to be very realistic in your pricing,” Jarvis said. “Just because a house sold six months ago for that price doesn’t mean they’re going to top that price now.”

Angela Prince, broker and owner of Prince & Associates Realty in Bay Shore, said homes were still getting multiple offers, but fewer than at the start of the year. Yet with a shortage of homes, sellers continue to receive prices higher than their asking prices “but not at a ridiculous rate like they were before,” she said.

Prince expects some homeowners, who have resisted putting their homes up for sale as prices rose over the past two years, will be more motivated to put their properties up for sale in the fall.

“Now it’s like, ‘Did I miss the boat? Let me hurry and throw my house on the market. I’ve got a few,’ she said.