Following a year of fast-rising inflation, high interest rates, and growing recession fears, sales of luxury U.S. homes dropped 38.1% year-over-year during the three months ending Nov. 30, 2022, the biggest decline on record, according to Redfin. A slowdown in the luxury market is largely driven by the same factors causing a price correction in the overall housing market, but high-end home sales are slowing at an even faster clip due to a lack of investment prospects and a sharp pullback from affluent buyers.
Nassau County, NY (Long Island) saw the largest decline in luxury home sales with a 65.6% year-over-year drop during the three months ending Nov. 30, followed by a 60.4% decline in San Diego and a 59.7% decline in San Jose.
There are early signs that overall homebuyer demand is starting to creep back as interest rates decline, which may ultimately cause the decline in luxury sales to ease. Mortgage applications and Redfin’s Homebuyer Demand Index—a measure of requests for tours and other buying services—have both been on the rise, and Redfin real estate agents say they’re seeing more buyers move off of the sidelines.
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