April 30 (Bloomberg) -- Home prices in the Hamptons, where rich and famous New Yorkers spend summers by the sea, fell in the first quarter as Wall Street job cuts and an economic slowdown took a toll on buyers.

The median price declined 7.1 percent to $882,500 and the number of sales dipped 29 percent from the last three months of 2007, according to a survey by appraisal firm Miller Samuel Inc. for New York-based Prudential Douglas Elliman Real Estate. Part- time Hamptons residents include Lazard Ltd. Chief Executive Officer Bruce Wasserstein and comedian Jerry Seinfeld.

``There's caution because of more potential layoffs in the future, so people are taking longer to make buying decisions,'' Miller Samuel CEO Jonathan Miller said in an interview. ``We're seeing a sharp drop in sales transactions, which are likely influenced by the problems on Wall Street.''

New York-based financial firms, hit by mortgage-related losses and writedowns, have cut about 31,500 jobs over the last 10 months, according to Bloomberg data. Wall Street's four biggest firms set aside 23 percent less money to pay compensation and benefits to employees in the first quarter compared with a year earlier, depressing demand for homes and causing sellers to reduce their asking prices.

The number of days a home stayed on the market rose 29 percent from a year earlier to 181. Homes sold for 9.6 percent less than the original asking price in the first three months of 2008, compared with 3.6 percent less in the first quarter of last year, the survey said.

`You're Going to Sit'

``If you don't price it properly you're going to sit,'' said Prudential Douglas Elliman CEO Dottie Herman, who owns a second home in Southampton. ``Price matters in this market. You're dealing with more inventory so there are more choices for buyers. Sometimes people will look at houses and if it's not priced right it will help sell someone else's who is.''

Hamptons communities include Southampton, East Hampton, Bridgehampton, Amagansett and Sagaponack. They are clustered on the south shore of Long Island, New York, about 90 miles east of Manhattan.

The number of Hamptons homes sold in the three months ending March 31 fell to 312, a 29 percent decline from the fourth quarter and a 42 percent drop from the first quarter of 2007, the survey said.

The median Hamptons home price rose 0.7 percent in the first quarter of this year from the same period a year ago, according to the survey.

Luxury Market

In the Hamptons luxury market, defined as the highest 10 percent of sale prices, the median price increased 5.1 percent to $5.4 million from a year earlier.

Combined sales in the Hamptons and the North Fork of Long Island, which includes Peconic and Southold, dropped 35 percent from the fourth quarter, while the median sales price fell 1.3 percent, the survey said.

The number of sales in just the North Fork fell almost 50 percent to 88 from the last three months of 2007, according to the survey. The fourth quarter is traditionally the slowest period for sales.

Nationwide, the residential market is mired in the worst decline since the Great Depression of the 1930s. Home prices in 20 U.S. metropolitan areas fell the most ever in February, according to the S&P/Case-Shiller survey released yesterday.

It would take 9.9 months to sell off the inventory of existing homes, according to the National Association of Realtors in Chicago. The average time over the last 10 years has been 5.4 months.

Fewer Mortgages

The Washington-based Mortgage Bankers Association estimates that 16 percent fewer mortgages will be written this year, compared with 2007.

The availability of mortgage financing drove down sales in the Hamptons, said Judi Desiderio, chief executive officer of Town & Country Real Estate in East Hampton, New York.

``Every market in the country is affected by that,'' Desiderio said. ``Unless you have sterling credit and can put one- third down and own everything else you have and can prove it, they're going to give you a hard time.''

Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co. and Lehman Brothers Holdings Inc. recorded a combined $14.1 billion in first-quarter compensation, compared with $18.2 billion in the same period a year ago. The steepest drop was at Goldman, where compensation fell 35 percent to $4 billion from $6.1 billion. All are based in New York.

Wall Street firms typically set aside money for compensation and benefits throughout the year. About 60 percent of the total is usually used to pay year-end bonuses.

To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net.

Last Updated: April 30, 2008 00:01 EDT