April 18 (Bloomberg) -- Luxury home prices slid in New York's Long Island and Queens in the first quarter as more property came onto the market and took longer to sell, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said.

The median sales price fell 5.3 percent to $900,000 from a year earlier and houses took 25 percent more time to lure a buyer, the companies said today in a report. An oversupply of expensive houses for sale is reducing demand, Jonathan Miller, president of New York-based Miller Samuel, said in an interview.

``You're just not seeing the demand level that you had been seeing in prior years,'' Miller said. ``You just reached a saturation point to what the economy could support.''

The decline in the luxury market in these areas outside Manhattan mirrors a drop in prices across the U.S. In Manhattan, the most expensive urban real estate market in the U.S., the median apartment price rose 1.2 percent in the first quarter to $835,000, the smallest quarterly gain in five years, Miller Samuel and New York-based Prudential said on April 3.

The luxury market is defined as houses priced from $750,000 to $12.5 million, Miller said. This survey doesn't include the Hamptons, New York's summer getaway for the rich and famous, or the North Fork on the east end of Long Island.

Longer Selling Time

In the first quarter, it took owners 121 days to sell their homes, compared with 97 days a year earlier, a sign demand has weakened.

The median sale price of a condominium dropped 4 percent to $240,000, Miller Samuel and Prudential said. The total number of condominium sales rose 6.2 percent to 1,312.

The weakness at the high end also hurt the overall housing market on Long Island, which includes the suburbs of Nassau and Suffolk counties, and in Queens, a borough of New York City.

The Long Island housing market is usually slower in the first quarter and results in the second quarter will be a better barometer of the market's condition.

``The true test is to watch the second quarter,'' Dottie Herman, president and chief executive officer of Prudential, said in an interview.

Sales fell 6.4 percent to 7,001 from a year ago and the median sales price slipped less than 1 percent to $437,500. The number of homes for sale jumped 18 percent to 31,954.

``Inventory levels today are double what they were two years ago,'' Miller said. ``It's a real issue. What that's going to do is temper any price appreciation going into the spring market.''

The overall Queens housing market performed better than Long Island because it's close to Manhattan and considered more affordable than other parts of the city, said Miller.

Queens Sees Gains

The median sales price for a home in Queens rose 3.8 percent to $492,900 compared with a year earlier. The number of houses sold gained 1.2 percent to 2,179.

Queens, located across the East River from Manhattan, has 2.26 million residents and is the second-most populous borough behind Brooklyn. Developers are building new condominiums and converting older buildings in neighborhoods there, including Long Island City, a former industrial area where some buildings have views of the Manhattan skyline.

Properties in that area include the Arris Lofts, a condominium on Thomson Avenue where a two bedroom, two-bath 1,900- square foot apartment has been offered for $1.3 million. The building includes a gym, a lap pool, a shared roof deck, on-site parking and a concierge.

Nassau and Suffolk counties have a population of 2.75 million, according to the U.S. Census. Nassau, which borders Queens, has a median income of $80,293, compared with a U.S. median of $46,242.

North Shore Prices

The county attracts professionals who wish to live within commuting distance of the city and includes an area on the North Shore called the ``gold coast'' where properties sell for millions of dollars. The median sales price on the North Shore fell 9.9 percent to $705,000 in the first quarter, according to Miller Samuel and Prudential.

A five-bedroom, five-bath single-family Colonial-style home in Suffolk's Cold Spring Harbor, about 25 miles from the New York City, is being offered for almost $3 million, according to Daniel Gale Sotheby's International Realty's Web Site. It has 5,800- square feet and access to a nearby beach and dock.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net.

Last Updated: April 18, 2007 12:36 EDT