Luxury home prices grew nearly three times faster than non-luxury properties last quarter, setting new records and surprising some industry analysts.
According to Redfin, the median sale price of luxury U.S. homes rose 9 percent annually to $1.1 million in the third quarter, while the median sale price of non luxury homes climbed 3.3 percent to $340,000. Both were at the highest level of any third quarter on record.
This report defines luxury homes as those estimated to be in the top 5 percent of their respective metro area based on market value, and non-luxury homes as those estimated to be in the 35th-65th percentile based on market value.
Some 42.5 recent of luxury homes that sold in the third quarter were purchased in cash, up from 34.6 percent a year earlier. By comparison, just 28 percent of non-luxury homes that sold were bought in cash.
“Wealthy homebuyers have more tools to weather the storm of high mortgage rates,” said Redfin Senior Vice President of Real Estate Operations Jason Aleem. “Many of them can afford to pay in cash, meaning they’re escaping high mortgage rates altogether. Others are choosing to take on a higher rate and refinance later—an expensive option that isn’t feasible for a lot of lower-income consumers. Affluent Americans are still spending big, in large part because of pandemic savings and resilient housing and stock values.”
luxury new listings rose 0.3 percent in Q3, while non-luxury new listings fell 22 percent. The total supply of luxury homes for sale grew 2.9 percent from a year earlier, compared to a record 20.8 percent decline in the supply of non-luxury homes.