Luxury Up 3.2 Percent in the Third Quarter

Home prices in the U.S. luxury market appreciated 3.2 percent annually in the third quarter of 2018 to an average of $1.7 million, marking the lowest growth rate since Q4 2016.

The luxury markets with the largest home price appreciation for the quarter are located in Florida and Nevada; West Palm Beach, Fla.'s average luxury sale price grew 54.5 percent annually to $1.7 million. Of note, Florida also topped the list of luxury markets with biggest losses: the average luxury home price dropped most in Vero Beach, Fla. -- 46.1 percent YOY.

Redfin chief economist Daryl Fairweather says, “A great deal of the slowing price growth among luxury homes can be explained by the stock market, a strong indicator of luxury homebuyers’ wealth, or at least their perceived wealth,” adding, “The stock market fluctuations that began last quarter likely caused some uncertainty among wealthy individuals, which has made luxury buyers more sensitive to price. The swings in stock portfolios have only grown more frequent in recent weeks, so we expect this trend of slowing luxury home price growth to continue at least into the end of the year.”

This analysis tracks home sales in more than 1,000 cities across the country and defines a home as luxury if it is among the top 5 percent most expensive homes sold in the quarter. The average price for the bottom 95 percent of homes was $343,000, up 3.6 percent in the third quarter compared to a year earlier, but the growth rate was down from 5.1 percent in the second quarter.

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