The typical U.S. luxury home sold for a record $1,180,000 in the second quarter, up 8.8% from a year earlier—the biggest increase in nearly two years, according to Redfin.
Meanwhile, non-luxury home prices grew at less than half that pace, rising 3.8% to a record high median of $342,500.
“The luxury market has withstood the havoc wreaked by high mortgage rates this year, thanks to an abundance of all-cash buyers,” says Sheharyar Bokhari, senior economist for Redfin, in a recent report. “Now that sales are stabilizing and more homes are being listed for sale, it’s unlikely that luxury prices will continue to grow at quite as high a rate.”
High-end buyers were less likely to be impacted by the rate lock-in effect and uncertainty around the direction of mortgage rates, which sat above 7% for much of the quarter.
They were also more likely to have benefited from a strong stock market and high levels of home equity.
This spring, 43.7% of luxury homes sold were purchased with all cash, up from 43.2% a year earlier, Redfin says.
The number of luxury homes sold in the second quarter was virtually unchanged from a year earlier, ticking up by 0.2%, marking the third consecutive quarter of sales growth.
Non-luxury home sales fell 3.4% to the lowest second-quarter number in a decade.
“There is still strong demand for well-priced, high-end properties, especially those which are presented beautifully and move-in ready,” said Crystal Zschirnt, a Redfin Premier agent in Fort Worth, Texas, where luxury home sales were up 9.7% year on year and typically sold four days faster than non-luxury homes. “We had a client recently list a property for $2.4 million that we ended up selling for $2.6 million. We are still seeing multiple offers in situations where a property is priced accurately, visually appealing and doesn’t need any work.”
Even though the overall market is seeing far less activity than it did pre-pandemic—in large part due to an ongoing supply shortage—the luxury market has made up more ground since. Compared to the second quarter of 2019, luxury sales were down 12.8%, while non-luxury sales were down 20.1%.
The report notes that luxury home inventory is now at its highest level in three years – up 9.7% year over year.
Photo: Daniel Barnes