Rising Luxury Home Prices Cause Sales to Decline

Home prices continue to rise in nearly every segment of the marketplace, including the luxury sector. According to real estate marketing platform Redfin, prices of luxury homes grew by 3.9% year-over-year to a median price of $1.25 million in August. However, this median price is still lower than the all-time high of $1.35 million in March of this year. Still, luxury home prices grew nearly three times faster than non-luxury home prices, which increased by 1.4% to a median price of $370,000.

As prices in the luxury market grow, sales have declined. Luxury home sales fell by 0.7% year-over-year to the lowest August level since at least 2013. Pending sales of luxury homes did increase, however, but by just 0.1%.

Sales were stagnant even as the number of luxury homes on the market grew 9.5% last month to the highest level for August since 2020.

The number of non-luxury homes for sale grew faster (13.4%) to reach the highest August level since 2019.

New listings of luxury homes were basically flat (0.2%), while new non-luxury home listings fell 0.8%— highlighting that sellers are joining buyers in pulling back from the market.