Home Prices are Falling. So Are Home Sales.
Despite the steady decline in home prices over the past few months, there have been fewer buyers. For those who already own a home and were looking to move, many have changed their minds and decided to sit tight.
According to data from OneKey® MLS, home prices in Nassau County fell in three of the last five months. In November, the median sales price was $668,000, down only 1% from the previous month at $675,000 in October, but up 2.5% from November 2021. Suffolk also had a slight dip in its prices; November’s was 1% lower month over month at $545,000, compared to $550,000 in October. However, it was 4.8% higher than it was last November.
Nationwide, home prices were higher than last year, but they were still in decline this year. According to the National Association of REALTORS® (NAR), November’s existing-home prices were at $370,700. Although prices were 3.5% higher than last year, they were in decline for five straight months this year after peaking at $413,800 in June.
Where home prices will go next year is anyone’s guess. Both the Mortgage Bankers Association (MBA) and the NAR foresee prices bouncing back. The MBA predicts a 0.7% increase, while NAR sees prices going up by 1.2%. Others have taken a negative view. Fannie Mae says prices will go down 1.5% in 2023. Goldman Sachs’ prediction is a 7.5% drop in prices; KPMG LLP’s prognostication is more dire, forecasting a decrease of 20%.
“Prices remain stable, but that’s because inventories are so low,” says Levi Kushnir, president of Stable Holdings, a real estate company based in Valley Stream.
Home sales haven’t fared any better either. The NAR reported that existing home sales hit their longest streak of declines at 10 months in November, with an annual rate of 4.09 million. (The annual rate is the number of homes sold in the past 12 months.) That is down 7.7% from the previous month and 35.4% from last year and the lowest rate since May 2020.
After hitting a peak in August with 1,393 sales, Nassau saw three straight months of declines, based on data from OneKey MLS. Last month, only 939 homes were sold in Nassau, which is 11.7% off from October’s figure and a drop of 23.8% from the previous November. Like Nassau, Suffolk’s sales numbers fell for the third consecutive month. In November, 1,225 homes were sold — a mere 2% decline from October (1,250), but a sharp drop of 20.2% compared to the previous November, when 1,535 homes were sold.
“Sales volumes are down throughout the Long Island market,” Joe Moshé, the owner and broker of Charles Rutenberg Realty, Inc., headquartered in Plainview. “There are fewer homes for sale because sellers are waiting to make moves until interest rates come down, until the spring selling season or until they know the market is stable. Many buyers are in fear of high interest rates so they remain on the sidelines. Buyers, who are qualified, are trying to avoid high rents, but, with little inventory to choose from, are resigning leases and taking their chances for a better market to come.”
The only bright spot is the decline of mortgage rates, which have been below 7% since November 10. As of December 29, 2022, Mortgage News Daily reported that the 30-year fixed mortgage rate was at 6.5% and, for Freddie Mac, the rate was at 6.42%. But, despite the lower sales prices, prospective homebuyers are postponing their purchases because they believe the mortgage rates are still too high. Further, homeowners who were initially looking to unload their properties are staying where they are because, if they sell, they will go from paying 3-4% on their mortgages to 6-7%.
Real estate experts are expressing concern for the housing market next year. Inflation is still high and the Federal Reserve recently hiked interest rates another 0.5%, with more increases to come in 2023. There is also talk of a recession, mass layoffs and a shrinking economy in the coming year. If any or all of these events happen, the housing market will continue to suffer.