Higher mortgage rates, prices make for challenging fall for Long Island homebuyers

Entering 2026, real estate agents were hopeful that a gradual decline in mortgage rates over the course of the year could make homebuying more affordable and convince homeowners this was the year to sell.

But as fall approaches on Long Island, that hasn't panned out. There's no new wave of homes for sale and house hunters over the next few months are facing the highest mortgage rates in more than a year. This comes as Long Island was dubbed the country's strongest seller's market by Redfin, and real estate agents say they don't expect the market to turn in buyers' favor anytime soon.

Plus, the run-up in rates might not be over. The average 30-year fixed-mortgage rate was 6.95% for the week ending Thursday, according to Freddie Mac. Another mortgage rate index published by Mortgage News Daily reported the average 30-year rate at 7.19% on Thursday.

"It's been a pretty rough ride for rates over the past two weeks," said Andrew Russell, regional executive vice president at CrossCountry Mortgage in Hauppauge.

It's been a pretty rough ride for rates over the past two weeks.

— Andrew Russell, regional executive vice president at CrossCountry Mortgage in Hauppauge

Higher mortgage costs tend to drive down prices as fewer buyers can afford to purchase. But real estate agents and mortgage lenders who spoke with Newsday said they still believed there was room for prices on Long Island to grow this fall — even if there are fewer transactions.

The recent increase has been far less damaging to buyers than in 2022 when rates more than doubled, Russell said, and the buyers who have been successful competing against other offers often have large down payments and high enough incomes that recent changes won't knock them out of the market.

"Because of the low supply, the quality of buyer that does get the accepted offer, it's a lot easier to work with them," Russell said. "There aren't things in a rising rate environment that would have them get declined."

What's happening on Long Island, and how do we compare to the U.S.?

Long Island's inventory shortage remains the leading factor in why home price gains on Long Island have outpaced the country as a whole, said Adam Kamins, a senior regional economist at Moody's Analytics. 

Median home prices reached all-time highs in August in both Nassau and Suffolk Counties. The median sale price rose 4.7% to $911,000 in Nassau from a year ago, eclipsing the $900,000 mark for the first time. In Suffolk, the median increased 7% year-over-year to a record $760,000. 

Home prices broke records last month. Medians hit

$911,000 in Nassau

and

$760,000 in Suffolk

Long Island's above average price growth has largely been driven by too few sellers interested in moving rather than outsize demand compared with the rest of the country, Kamins said. 

"Over the course of the year, the U.S. market and the Long Island market have diverged," Kamins said. "Whereas nationally we've seen pretty clear evidence of a slowdown in price appreciation, that's not really happening on Long Island."

There's little incentive to move when buyers face a much higher housing payment even if they choose to move to a similar or smaller house. 

The

average residential mortgage rate

in the U.S. among existing mortgages was

4.4% in the first quarter of this year

The average residential mortgage rate in the United States among existing mortgages was 4.4% in the first quarter of this year, and two-thirds of borrowers had a rate of 5% or less, according to data from the Federal Housing Finance Agency.

Until interest rates fall and attract more sellers to enter the market, the low-inventory dynamic of Long Island isn't likely to change, said Richard Haggerty, CEO of OneKey MLS.

"I just don't see that happening in the near future where there's going to be any significant reduction in interest rates," he said.

Mortgage rates closely track the 10-year yield on U.S. Treasury bonds, which rose above 5% to its highest point since 2007 earlier this week.

The economic factors pushing up yields include higher inflation expectations, rising energy prices and increased corporate debt related to investments in artificial intelligence, said Chen Zhao, head of economics research at Redfin. 

The Federal Reserve also raised its benchmark interest rate Wednesday to a range of 3.75% to 4% as it works to slow down the pace of price increases. It was the first time the central bank increased its key rate in three years and comes after the Fed had cut its rates three times last year. 

What agents are seeing

In June, real estate agents Mariana Nunes and Bridget Terry, of Compass, listed a modestly-sized home in Hampton Bays. The Frank Lloyd Wright-inspired cottage spanned 864 square feet, with an asking price of $750,000. It went into contract "right away," Nunes said — and two months later, closed for $801,000.

"Overall, we're seeing that happen over and over," Nunes said, referring to quick transactions. Several of her recent East End listings have garnered multiple offers over their asking prices, leading to contracts being signed before the ink dries — and happy sellers.

The Long Island seller's market is strong as ever. According to Redfin's data, buyers outnumbered sellers in Nassau and Suffolk counties by 36.2% this July, showing 11,958 buyers house-hunting in the region, and 7,631 sellers.

Buyers are willing to act, but they're also very informed, so there's strong but disciplined demand.

— Mariana Nunes, Compass agent

In a rising-rate environment, sellers and their agents must be more skeptical of buyers' offers, said Kieran Rodgers, an agent at The Agency in Huntington. When evaluating offers for his clients, he often calls buyers' loan officers to assess whether they could still qualify for a mortgage if rates rose by a quarter-point.

"If you're not having those conversations with the mortgage banker, protecting your seller and asking the questions, the deal can definitely blow up," Rodgers said.

Real estate agents anticipate the market continuing to boom in the seller's favor this fall. Until then, buyers have to fight to make themselves stand out by appearing flexible to sellers and getting in the game early, agents say.

Nunes, whose office is in Westhampton Beach, said strong demand has continued on the East End. But buyers often do their research on market value: "Buyers are willing to act, but they're also very informed, so there's strong but disciplined demand."

How buyers are reacting

Buyers are flocking to homes that have potential for multigenerational living, particularly for families with aging members, said Ted Kritikos, an agent with Daniel Gale Sotheby's International Realty, with offices in Greenvale and Great Neck.

That has made split-levels, ranches and other houses that provide enough room for separate spaces for family members more popular, he said.

Multigenerational living has also allowed buyers to pool resources, real estate experts told Newsday. Jasleen Sabharwal, an agent with Douglas Elliman Real Estate in Roslyn, sold a multigenerational home in Deer Park last month for $1.25 million, the highest-priced public home sale in the hamlet so far this year, according to OneKey MLS records.

"The multigenerational [demand] has not subsided," Sabharwal said. Because of how many prospective homebuyers work from home, "size has become one of the biggest amenities," she said.

Unless interest rates come down sharply, I really don't see a change in this being a very strong seller's market.

— Ted Kritikos, Daniel Gale Sotheby's International Realty agent

Buyers can set themselves apart from the competition by acting quickly, said Natalie Villecco, a real estate agent with Real Broker NY in Massapequa. She and her partner Nicholas Larsen have a listing in West Babylon that received a cash offer above the asking price, with the buyers stressing that they "would be willing to wait or move quickly" to align with the seller's timeline. The house went into contract this week.

"Buyers need to move at the speed of the market," Villecco said. "When these houses pop up, there's no time to waste to get out there and tour them."

And heading into the fall season, the market shows no signs of shifting to give buyers more leverage.

"Unless interest rates come down sharply," Kritikos said, "I really don't see a change in this being a very strong seller's market."