Oct. 16 (Bloomberg) -- Brooklyn home prices tumbled 5.6 percent in the third quarter as Wall Street job losses reduced demand for real estate in the New York borough across the East River from lower Manhattan.

The median sale price for a home in Brooklyn fell to $510,000 from $540,000 a year earlier, according to a report issued today by New York-based real estate appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate. The number of sales tumbled 38 percent to 2,298.

Unemployment and tighter credit standards are cutting demand for real estate in New York City, said Paul Purcell, a partner in real estate consulting firm Braddock & Purcell. New York City Comptroller William C. Thompson yesterday raised his forecast for job losses in the city's financial service industry to about 35,000 over the next two years, up from his earlier estimate of 25,000, as the U.S. economy worsens.

``It's getting tougher and tougher to get a mortgage in New York, even if you still have your Wall Street job,'' Purcell said in an interview. ``Most lenders have stopped counting bonuses as income, and for Wall Street workers, that's the bulk of their paycheck.''

Brooklyn, the most populous of New York's five boroughs, is known for distinctive neighborhoods that range in character from Greenpoint, where Polish is as common as English, to the Heights, where Wall Street titans live in brick townhouses overlooking their offices in downtown Manhattan. Brighton Beach, at the southern tip of Brooklyn, is called ``Little Odessa'' for its large Russian-speaking community, and Dumbo, or Down Under the Manhattan Bridge Overpass, is a mecca for artists and the galleries that sell their work.

`Wall-Street Driven'

``There are wonderful neighborhoods in Brooklyn that have boomed right along with Manhattan real estate, but they are both Wall Street-driven markets so they're not going to be able to escape the effects of what's happened in the last few days,'' Purcell said.

U.S. stocks yesterday plunged the most since the crash of 1987 on doubts the government plan to bail out banks will keep the economic slump from deepening. On Friday, the Dow Jones Industrial Average posted its steepest weekly slide in the history of the 30- stock average and the Standard & Poor's 500 Index capped its worst week since 1933.

Greenpoint and Williamsburg, located across the East River from Manhattan's East Village, were the only Brooklyn areas to see a rise in values. The median sale price in the two neighborhoods at the northern tip of the borough rose 6.9 percent to $641,497 from $600,000 a year earlier as sales fell 21 percent, according to the report.

The median price in south Brooklyn, including Brighton Beach, Coney Island, and Flatbush, tumbled 5.2 percent in the quarter to $465,000 and sales dropped 38 percent. East Brooklyn, including Bedford Stuyvesant, Bushwick and Ocean Hill, saw a 20 percent decline to $441,400 and sales plunged 45 percent.

The northwest region of the borough that includes Brooklyn Heights, Park Slope and Cobble Hill, had a 3.9 percent decline in the median price to $658,250. Sales dropped 40 percent.

To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.

Last Updated: October 16, 2008 00:00 EDT