Water Mill is a census-designated place (CDP) in Suffolk County, New York, USA, and a hamlet of the Town of Southampton. The population was 1,724 at the 2000 census. Water Mill is the correct name as per local government and the United States Postal Service. Its ZIP Code is 11976. Water Mill is considering incorporating as a village following the unsuccessful attempt by Dunehampton, New York to incorporate. Dunehampton's incorporation would have cut Water Mill off from the Atlantic Ocean beaches. Sagaponack, New York incorporated for a similar reason. As of 2009, Water Mill was listed as the sixth most expensive Small Town in the United States by Business Week. The median home price was $2,238,676.