Hampton Home Prices Fall Amid Tight Inventory For Sale

Home prices in the Hamptons, the resort at the end of Long Island favored by Wall Street brokers and bankers, declined in the first quarter as buyers opted for slightly less-pricey properties amid a shortage of homes for sale, according to a report by Miller Samuel and brokerage Douglas Elliman Real Estate.

The average home price in the luxury second-home market dropped 28.9% in the second quarter to $2.19 million from a record $3.08 million in the first quarter to 28.9%,

"What’s interesting about the decline in sales is it’s not solely because of the spike in mortgage rates and economic uncertainty—economists have been forecasting a recession in six months for the last two years," said Miller Samuel CEO Jonathan Miller. "But I think it’s also because of the severe lack of inventory."

Housing Inventory Rates and Bidding Wars

Year-over-year, available inventory is up 6% from the peak post-pandemic buying, but it remains 62.7% below pre-pandemic levels from the second quarter in 2019, Miller said. As a result, the lack of homes for sale has caused sales to continue to be tepid. 

“It’s not just high rates. It’s a chronic lack of supply in the market,” said Miller. 

Miller said that one in five closings was above the asking price in the second quarter, as bidding wars drove up prices. The all-time high was hit last year, with one in three homes selling over the asking price. 

The median price is down 9.4% from the all-time high of $1.6 million, but the current median price of $1.45 million is 70.6% higher than pre-pandemic levels. 

Miller said many homeowners are sitting on their properties because of the lower interest rates they received over the past few years. Homeowners with 3% mortgages are reluctant to jump back into the market and end up paying 7%. 

Where Did the Inventory Go?

With less inventory, there are fewer houses to choose from. For the priciest 10% of homes in the Hamptons market—those that sold for $4.4 million or higher—the average prices dropped significantly, to $8 million, from $12 million a year ago. 

Miller attributes the price decline to a shift in the mix of what is selling. "There’s no high-end product remaining," said Miller. "It was sold off during the boom."

In the second quarter, 21 homes sold in the $5 million or above category, down from 56 last year, said Miller. He went on to say that the demand remains, with bidding wars hitting a record in the top 10% of the market at 30.8%, up from 27.3% a year ago. 

"(The housing market is) still out of balance. It’s still extremely tight," said Miller. "It’s just not a frenzy."