Rising Mortgage Rates Didn’t Cool LI Housing Market

Long Island’s real estate market showed few signs of retreating in March, even as mortgage rates posted their biggest three-month rise since 1987.

The average rate on a 30-year fixed mortgage hit 5% this week for the first time since February 2011, according to mortgage giant Freddie Mac, adding higher borrowing costs to the list of challenges for buyers in Long Island, who are already facing house prices. near record highs and a shortage of homes for sale.

The median price of a home sold in Nassau County last month was $650,000, up 8.3% from the March 2021 median. In Suffolk, the median sale price was $530,000 , or 12.8% more than a year earlier, according to published data. Thursday by OneKey MLS, the multiple listing service that covers Long Island. House prices have remained relatively stable since the fall.

The number of homes sold on Long Island fell 18% in March from a year earlier, reflecting the shortage of listings.

March pending sales figures, which are a more current indicator than closings, show that the local housing market has not yet been slowed by rising interest rates, said Jim Speer, CEO of OneKey. MLS. During the month, the average rate on a 30-year fixed mortgage rose nearly a percentage point, from 3.76% to 4.67%, according to Freddie Mac.

There were 1,694 pending sales in Suffolk County last month, in which a contract had been signed but the transaction had not yet closed. That was 0.6% higher than the same month in 2021, even with fewer homes on the market. It was the first year-on-year increase in pending sales in Suffolk in nearly a year. In Nassau, there were 1,345 pending sales, down 8% from March 2021 but higher than in recent months.

“At this point, with inventory so low and demand so high, it’s really hard to say when that might hold the market back,” Speer said of the higher rates. “We’re at the point where some people thought it would start to slow the market and it’s not. It’s hard to really say when or if it will happen.”

Unusually low inventories have increased competition among buyers. There were 4,932 homes on the market in March, an 8.6% improvement from February, but still nearly 20% less than the selection available to buyers in March 2021. There were 1,106 sales closed in Nassau and 1,251 in Suffolk last month, down about 18% in both counties.

Cory Knopf, an associate broker with Compass’s Hal Knopf team in Oceanside, said the number of new listings at Oceanside over the past four weeks was the highest of any four-week period in the past year. “But the number of signed contracts was always within one or two of the number of signups that appeared, so it doesn’t even matter,” she said. “We are still not increasing inventory. We just sell more.

Knopf said she doesn’t think higher interest rates will lower prices, but she has seen it affect behavior. A buyer who was considering homes around $800,000 last year when interest rates were around 2 points lower is now considering homes around $700,000, she said. declared.

“Because there are so many buyers available who want homes, I just think it’s a shift in which buyers are going to bid on which homes,” Knopf said.

Others say higher rates could precede the end of the era of creeping bidding wars. Zahra Jafri, president of Lynx Mortgage Bank in Westbury, said a two-point rise in mortgage rates over a short period of time affects how much buyers can afford to spend.

“We still don’t see house prices coming down, but that will eventually be the result,” she said.

Nationally, real estate brokerage Redfin is seeing signs of slowing demand, with online searches for ‘homes for sale’ down 3% and mortgage purchase requests down 6% per year. compared to the previous year.

“There really is a limit to homebuyer demand, even though the market over the past few years has made it seem endless,” Daryl Fairweather, chief economist at Seattle-based Redfin, said in a statement. communicated. “The sharp rise in mortgage rates is pushing more buyers out of the market, but it also appears to be discouraging some homeowners from selling. With both demand and supply falling, the market is unlikely to shift from a seller’s market to a buyer’s market anytime soon.

Comments are closed.