by: Nick Orlando | Licensed Associate Real Estate Broker
Long Island Ranked One of the Hottest Housing Markets for 2026
After several years of volatility marked by rising mortgage rates, affordability challenges, and hesitant sellers, the housing market may finally be approaching a turning point. According to forecasts from Redfin and Realtor.com, Long Island and the broader New York City suburban region are expected to be among the hottest housing markets in the country in 2026.
While much of the national conversation focuses on where markets may cool, Long Island continues to stand out for one simple reason: inventory remains historically tight.
Long Island Inventory: The Core Reason the Market Remains Hot
Despite slower sales activity in 2025, both Nassau and Suffolk Counties continue to operate with far less inventory than a balanced housing market would require.
Nassau County Inventory Snapshot
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Homes for sale (Dec 2025): 1,764
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Months of supply: 2.1 months
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Inventory is down ~18% year-over-year (2,160 homes in Dec 2024)
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Months of supply declined from 2.6 to 2.1 year-over-year
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Active inventory is now approximately 67.3% below its mid-2020 peak
Suffolk County Inventory Snapshot
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Homes for sale (Dec 2025): 2,466
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Months of supply: 2.2 months
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Inventory is down ~18% year-over-year (3,018 homes in Dec 2024)
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Months of supply declined from 2.7 to 2.2 year-over-year
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Active inventory is approximately 66.2% below its prior peak (mid-2019)
To put these figures in context, economists generally view 5 to 6 months of supply as a balanced market. Long Island is currently operating at roughly 2 months of supply in both counties — less than half of what balanced would look like.
That imbalance is the foundation of Long Island’s strength heading into 2026.
Mortgage Rates: The Lock-In Effect Is Easing, Slowly
Mortgage rates remain a key variable in the housing outlook. According to data from the FHFA:
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The share of U.S. mortgages with rates under 5% peaked at 85.6%
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That figure has declined to around 72%
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Roughly 18% of borrowers now carry mortgage rates of 6% or higher
This gradual shift suggests the so-called “lock-in effect” is beginning to loosen, but not fast enough to meaningfully increase inventory on Long Island — reinforcing continued supply pressure.
At the same time, rates have shown early signs of stabilization. Freddie Mac recently reported the average 30-year fixed mortgage rate at 6.23%, down from 6.81% a year ago. Even modest declines in rates can materially improve purchasing power in high-price markets like Nassau and Suffolk.
What This Means for 2026 on Long Island
For buyers, 2026 may bring:
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Slightly improved affordability
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More consistent, but still limited, listing flow
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Less chaos than recent peak years — but continued competition
For sellers, the data remains supportive:
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Inventory is not just low — it’s lower than last year
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Pricing remains resilient due to structural undersupply
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Well-located, well-priced homes should continue to attract strong demand
Bottom Line
While national forecasts point toward gradual normalization, Long Island enters 2026 from a position of strength. With inventory levels near historic lows, improving mortgage conditions, and sustained demand for suburban living near New York City, the region is well positioned to remain one of the country’s hottest housing markets — even as other areas cool.
