Sales of luxury homes fell 17.8% year over year during the three months ended April 30. That’s a much larger decline than non-luxury homes, which were down just 5.4% in the same period.
The times when the declines were most severe in this decade came during the 2020 pandemic, when the market fell by as much as 23.6%.
The high-end housing market has cooled off after an 80% increase in sales last year, thanks to rising interest rates, spiraling inflation, a shaky stock market and an uncertain economic outlook. Redvin said higher mortgage rates could translate into thousands of dollars in monthly housing bills for more expensive homes.
Redfin said sales of luxury homes began to plummet this time last year, when there was a shortage driven by wealthy remote workers who wanted to leave cities and take advantage of low mortgage rates.
“The good news for buyers is that the market is becoming more balanced and competition is declining,” said Elena Flick, a Redfin real estate agent in West Palm Beach, Florida. “Of course, that doesn’t help the dozens of Americans who are perfectly priced.”
Luxury home prices are still rising – although not at the same rate as last year. Average sales price increased 19.8% year-over-year to $1.15 million, down from its peak of 27.5% in the spring of 2021. Pre-pandemic price increases were flat, year-over-year at less than 10%. Flick said sellers are now willing to lower asking prices as demand slows and the housing shortage eases.
Redfin has been tracking this data since 2012, which qualifies luxury homes to be in the top 5% based on local market value. Prices for non-luxury homes range from 35 to 65 percent based on market value.
Nassau County, New York, saw a 45% drop in sales of luxury homes. Metro areas, including Oakland, California, West Palm Beach, Florida, Dallas, and Austin, Texas, saw sales decline more than 30%.
CNN Business’s Anna Bahni contributed to this report.
