Long Island home prices in August fell below all-time highs set earlier in the summer, but the number of homes on the market also declined, suggesting the market may remain in favor of sellers into the fall. .
The median sales price in Nassau County last month was $700,000, $20,000 below the record set in June and matched in July. Still, the median was 4.5% higher than it was in August 2021, according to new data released Tuesday by OneKey MLS.
In Suffolk, the median sale was $565,000, or $10,000 less than the record price set in July. The median increased 6.6% from the previous year.
While prices continued to appreciate compared to a year earlier, the rate of appreciation in both counties was the lowest since July 2020, when the end of the first wave of the pandemic ushered in a housing boom.
The median prices for sales that were under contract last month but had not yet closed were lower than the figures for closed sales. Median pending sales in Nassau last month was $660,000, or 1.5% higher than the same figure in August 2021. In Suffolk, median pending sales was $535,000, or 4 .5% more than the previous year.
“We’re seeing what appears to be a slight drop in sales price,” said Jim Speer, CEO of OneKey MLS. “In both Nassau and Suffolk, this is the third month in a row that we’ve seen a small decrease in contracted selling price, so it leads me to believe it’s more than just seasonality.”
Significantly higher mortgage rates have made purchases more expensive for Long Islanders, slowing sales. The average rate for a 30-year fixed mortgage was 5.22% in August compared to 2.84% in August 2021. The average has since increased to 5.89% as of September 8, according to mortgage giant Freddie Mac.
“Between interest rates and inflation, I think it’s making buyers stop at how much they’re offering for homes and sellers more realistic that they’re not going to get the top price,” Speer said.
The number of homes sold in August fell 17.4% to 1,349 in Nassau and 8.2% to 1,645 in Suffolk compared to August 2021.
While home sales are lagging their pace in 2021, Speer said transaction numbers have improved from recent months. The number of closures in Nassau was the highest since last October.
Those sales were enough to deplete the number of homes on the market and keep home buying competitive. There were 6,760 homes on the market at the end of August, down 7% from the previous month. The decline ended six straight months of rising inventory after listings hit a record low in January.
The shortage of homes for sale has helped keep prices high and has forced buyers to compete with each other. At the rate homes went into contract last month, it would take 2.2 months to sell existing inventory in Suffolk and 2.6 months in Nassau. Generally, five to six months of supply are needed to create more balanced negotiations between buyers and sellers.
“There wasn’t enough inventory to make up for that demand,” Speer said. “With low inventory, the demand is going to be there, which should mean the market will continue to be strong and we won’t see the significant drop that some people have been talking about.”