According to the latest analysis by Redfin, in the first quarter of this year, the median sales price for the most expensive residences in the United States, representing the top 5% of the market by value, reached $1.23 million, marking a historic high and an 8.7% increase compared to the same period last year.
At the same time, the median sales price for typical residences, representing the middle one-third of the market, rose by 4.6% to $345,000. However, Redfin's analysis did not cover the price trends for the bottom one-third of the market.
The continuous rise in mortgage interest rates has deterred many potential homebuyers and is also one of the main reasons for the slowdown in the U.S. real estate market. According to data from Freddie Mac, the average interest rate for 30-year mortgages has remained around 7% this year.
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With the increase in mortgage interest rates, borrowers may face an additional burden of several hundred dollars per month. In a scenario where housing supply is relatively scarce and prices continue to rise, this restricts the purchasing power of borrowers. Despite the overall decrease in purchasing power among homebuyers due to rising mortgage interest rates, demand for high-end residences remains strong, far exceeding that for mid-range residences.
Data shows that in the first quarter, sales of luxury residences increased by 2.1% year-on-year, while sales of residences in the middle one-third of the market decreased by 4.2%. Affluent homebuyers have a financial advantage in terms of flexibility, making them more inclined to make cash payments for their purchases, bypassing the restrictions of mortgage loans.
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Compared to lower-priced properties, this trend contributes to an accelerated increase in sales prices for high-end residences.
According to Redfin's data for the three months ending February 29, approximately 46.8% of luxury homes were purchased with all-cash transactions. This represents the highest proportion of all-cash purchases in at least a decade, exceeding the 44.1% reported for the same period last year.
Despite a significant increase in inventory of high-end properties this year, prices for the most expensive homes continue to rise. Redfin reports that the number of luxury homes increased by 12.6% year-on-year in the first quarter, while the number of newly listed luxury homes grew by nearly 19%.
In contrast, inventory of residences in the middle one-third of the market decreased by 2.9% in the January to March period compared to the same period last year.
