US Luxury Property Market ‘coming back to earth’

Sales of high-end homes plummeted by nearly 18% during the three months to the end of April, the largest drop since the onset of the coronavirus pandemic. Following last year’s “meteoric” surge, some heat is now coming out of the USA’s luxury housing market.

Sales of high-end homes fell by -17.8% year over year during the three months to the end of April, the largest drop since the onset of the coronavirus pandemic.

Only two quarters in the past decade have seen steeper declines: the three months ending June 30th 2020 (-23.6%) and the three months ending May 31st 2020 (-21.6%).

Rising mortgage rates, a slumping stock market and general economic uncertainty are among the key factors having an impact, according to Redfin. “The year-over-year cooldown is also a reflection of the market for high-end homes coming back to earth following a nearly 80% surge in sales a year ago,” said the firm, which analysed the top 5% of sales by value to compile the data.

The median sale price of luxury homes rose 19.8% year over year to $1.15mn during the three month-period – above pre-pandemic levels of c.10%, but down from a peak of 27.5% in the spring of 2021.

New listings of luxury homes rose 1.1% year-on-year, marking the first increase since the three months ending July 2021.

Redfin real estate agent in Florida, Elena Fleck comments: “The pool of people qualified to purchase luxury properties is shrinking because the stock market is falling and mortgage rates are rising. The good news for buyers is the market is becoming more balanced and competition is easing up. Of course, that doesn’t help the scores of Americans who have been priced out altogether.”