The pandemic-era Long Island real estate boom seemed to come to an end in October. The culprit: average mortgage rates at their highest level in his 20 years.
Prices for homes under contract in October in Nassau County were lower than they were a year ago, while prices in Suffolk for deals under contract rose slightly. Transaction numbers plummeted in both counties as higher mortgage rates made buying much more expensive, according to new data released Monday by OneKey MLS. So far, low inventory has helped keep homebuyers competitive.
The median price of homes signed in October in Nassau County was $650,000, 1.6% lower than the median price of pending sales in October 2021. This was his first year-over-year decline since April 2020.
In Suffolk, median pending sales were $532,000, up 0.5% compared to the same month last year.
What you need to know
- Median Nassau Housing Contracts signed last month fell 1.6% compared to October 2021 to $650,000. It was the first year-on-year decline since April 2020.
- In Suffolk, median Pending sales in October increased by only 0.5% compared to the same month last year.
- higher mortgage interest rates It helped end the pandemic housing boom, but a low supply of homes for sale could prevent a collapse, local real estate experts say.
Home prices were flat year-on-year as the average 30-year fixed mortgage interest rate reached 6.9% in October. By the end of the month he averaged 7.08%. eat 7% It’s been 20 years. According to mortgage giant Freddie Mac, his average monthly interest rate in October 2021 was 3.07%.
OneKey MLS CEO Jim Speer said: “I think the fact that interest rates went up but didn’t fall further shows that it doesn’t seem to have led to a significant drop in prices. You’re right about where the year was. is probably a good thing and healthy. Before.”
Prices for closed deals have not yet fallen year-over-year. The median deal value for October was $675,000 in Nassau, up 3.8% from the same month last year, and $550,000 in Suffolk, up 6.2% from October 2021. Many of these buyers may have closed deals in August and September before the recent rise in mortgage rates.
Home prices for home deals hit record highs in July, with median prices reaching $720,000 in Nassau and $575,000 in Suffolk. OneKey MLS reports prices in nominal prices, not adjusted for inflation.
Rising mortgage rates make monthly payments harder for some buyers, making homes less attractive to sell for homeowners who bought or refinanced loans when interest rates were at historically low levels doing.
Nassau closed 1,035 stores, down 24.4% from October 2021. Suffolk store closing sales fell 28.1% to 1,226.
Higher interest rates put some buyers on hold, but they’re back, said Maria Wilbur, a realtor in Keller Williams Greater Nassau, who sells homes primarily in Suffolk County. increase. She recently listed her house in Bayshore and had seven offers, six of which were above list price, she said.
“If things are priced appropriately, there is still plenty of activity and sellers are exceeding demand. [price] “Otherwise, we’re seeing them stick around longer in the market.
The change in the market follows a period when prices were up 10% year-over-year. The explosive rise in prices after the start of the COVID-19 pandemic was triggered by a combination of government stimulus measures to households. Historically low mortgage rates. The rise of remote work has increased the demand for spacious homes. Housing inventory is historically low, according to a recent report released by economists at the Federal Reserve Bank of New York.
Low inventory on Long Island helped keep prices high Despite high mortgage interest rates. The number of homes on the market at the end of October was 3,050 in Nassau, down 3% from the previous year. In Suffolk, he took 3,561 with inventories up 7.6% year-on-year.
Mr Speer said predictions that a wave of foreclosures would lead to a significant drop in prices have not materialized. “We don’t know what will drive a significant increase in listings in the future,” he said.
According to one measure of inventory, the market still leans toward sellers. Based on the pace of pending sales, it would take about 3.1 months to sell all the homes on the market on Long Island. Buyers and sellers typically need 5-6 months of inventory to be on equal footing in the negotiations.
George Castera, a real estate broker and owner of Castera Realty Corp. in Freeport, said an influx of buyers from New York City helped boost local home prices during the pandemic, and flat prices are normal. said. He said he encourages buyers to find a home that fits their needs and budget and to act as soon as they find it.
“I think it’s because of the suddenness of the pandemic and the slowness of the market that people don’t realize it’s all normal,” said Castera. “This is the real estate cycle.”