Redfin has found that the typical U.S. luxury home sold for a record $1.17 million in Q4, up 8.8% from a year earlier. Prices of non-luxury homes increased at half the pace, rising 4.6% year-over-year to a record $340,000.
Redfin’s analysis divided all U.S. residential properties into tiers based on estimates of the homes’ market values as of January 2024. The report defines luxury homes as those estimated to be in the top 5% 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. The outsized increase in luxury prices, along with a jump in luxury new listings and improving sales, signal that affluent homebuyers and sellers are becoming more active.
Those in the hunt for these luxury homes are resorting to all-cash sales, as a record-high share of all-cash luxury home purchases drove the relative strength of the high-end housing market with 46.5% of Q4’s luxury purchases made in cash, up from 40% a year earlier.
And as cash has become king in most luxury home transactions, luxury home prices are rising at twice the rate of non-luxury prices, largely because so many affluent buyers are able to buy their homes in cash, rendering today’s elevated mortgage rates irrelevant. High mortgage rates have a more chilling effect on the rest of the market, upping interest payments and keeping price increases modest.
As the first month of 2024 came to a close, Freddie Mac reports the 30-year, fixed-rate mortgage (FRM) at 6.69%, still up from the average FRM of 6.13% reported at the same time period in 2023.
“A lot of luxury buyers are coming in with cash, snapping up expensive homes,” said Heather Mahmood-Corley, a Redfin Premier Agent in Phoenix. “High-end homes are selling fast, especially in desirable areas like luxurious Scottsdale, or Tempe, which West Coast transplants love because it’s centrally located. One client recently bought a house in Tempe, flipped it, and it sold for $1.4 million in two days.”
Low housing inventory is another factor pushing luxury prices up. Despite the supply of luxury homes having surged from a year earlier, volume is still below pre-pandemic levels, leading to competition from well-heeled buyers over a limited number of homes.
New listings of luxury homes jumped 19.7% year-over-year in Q4, marking the largest increase in over two years. The increase brings the number of U.S. new luxury listings to just under 53,000, comparable to fourth-quarter levels in 2018 and 2019, just before the pandemic started.
By comparison, new listings of non-luxury homes fell roughly 3% from a year earlier—though that’s the smallest decline in a year and a half.
According to Redfin, luxury new home listings soared for several reasons, including:
- High-end sellers put their homes on the market to cash out while prices were high.
- The mortgage-rate lock-in effect doesn’t hold back affluent buyers as much as middle-income buyers.
- New listings had a lot of room to grow, as they were sitting at their lowest level in a decade at the end of 2022.
- The total number of luxury homes for sale also soared, rising 13% year over year. Total non-luxury inventory dropped 9.7%.
Despite the year-over-year jump, total luxury inventory is still below typical Q4 levels, but the total supply of luxury homes is likely to rise more in 2024. That’s because new listings have already increased significantly, and more high-end homeowners are likely to jump on the selling bandwagon because they can command record-high prices.
“More luxury listings will temper price growth as the year goes on,” said Redfin Senior Economist Sheharyar Bokhari. “Overall, that’s a good thing for the high-end market: Sellers will still fetch fair prices, buyers will have more to choose from and sales should tick up.”
Sales of luxury homes dropped 1.7% year-over-year in Q4, the smallest decline since the middle of 2021. That’s compared to an 8.1% decline for non-luxury homes, the smallest since the start of 2022—but four times larger than the decline in luxury sales.
The median sale price of luxury homes rose most in Newark, New Jersey (11.6%); New Brunswick, New Jersey (10.9%); and Orlando (10.8%). It fell in just eight metros, with the biggest declines reported in Austin, Texas (-8.6%); Las Vegas (-6.1%); and Jacksonville, Florida (-2.3%).
New listings of luxury homes rose most in Phoenix (42.3%); Tampa, Florida (41.6%); and New York (31.6%). They fell most in Milwaukee (-16.7%); Baltimore, Maryland (-10.2%); and Chicago (-4.4%).
The total number of luxury homes for sale increased most in Austin, Texas (44.5%); San Antonio, Texas (33.1%); and Tampa, Florida (30.4%). It fell most in Detroit (-14.7%); Oakland, California (-12.6%); and Newark, New Jersey (-11.9%).
Luxury home sales increased most in Las Vegas (33.9%); Tampa, Florida (24.3%); and Pittsburgh (21.5%). They fell most in New York (-21%); Charlotte, North Carolina (-21%); and Kansas City, Missouri (-20.8%).
The 10 most expensive U.S. home sales recorded in Q4 2023 were found in:
- Miami, Florida (Indian Creek Village): $79M
- New York, New York: $75M
- New York, New York: $65.6M
- Aspen, Colorado (Glenwood Springs): $60M
- New York, New York: $47M
- Aspen, Colorado (Glenwood Springs): $42.3M
- San Francisco (Atherton): $40M
- Fort Lauderdale, Florida: $40M
- Miami, Florida (Miami Beach): $35.4M
- Los Angeles: $34.6M
Click here for more info on Redfin’s Q4 U.S. luxury home sales.
