High mortgage rates and the rising median price of U.S. homes has put a dent in most home sales categories, but the small market for ultra luxury properties is heating up.
Through July 15, six homes valued at more than $100,000 million have sold in the United States, CNBC reported. At the current pace of sales, the U.S. is trending toward doubling the number of such homes sold this year compared with 2023. The standing record of nine was set in 2021, when mortgage rates were still on the low end.
Data from Miller Samuel and Douglas Elliman shows homes priced at $50 million, $20 million and $10 million also are moving at a faster pace this year.
Some of the priciest homes in the U.S. are concentrated in a few markets. In New York, a penthouse at Central Park Tower (the world’s tallest residential building) sold this year for $115 million. Another penthouse at the Aman New York sold for $135 million to Russian-born billionaire Vladislav Doronin. And in Florida, off Palm Beach, the private Tarpon Island sold to Oakley found James Jannard for $150 million after he sold his California mansion for $210 million.
The uptick in sales of ultra-luxury homes is driven by the fact that buyers of these properties often have the cash on hand to purchase them and are insulated from mortgage rates. A soaring stock market reportedly has given many of these buyers the confidence to make a splash.
The outlook for high-end homes is improving despite a decline in foreign investment, which surged in luxury markets during the COVID-19 pandemic. Foreign home buyers purchased $42 billion in U.S. residential properties between April 2023 and March 2024, marking a 21.2% decline from the previous 12-month period, Yahoo Finance reported.
The average and median home sales prices for foreign buyers during the last 12 months were $783,300 and $475,000. Foreign investors often target pricy homes, but not necessarily in the most expensive echelon of U.S. residential real estate.
In June, the national median home sale price hit a record $426,900 and increased 4.1% from a year earlier. Existing home sales were down 5.4% in June from a year earlier. The drop in sales activity has corresponded with an increase in the inventory of homes for sale, rebounding somewhat from historic lows in recent years. It could be an early sign that the U.S. housing market, as a whole, will become more favorable to home buyers.
“The latest data is implying that maybe we’re seeing a slow shift away from what had been a sellers’ market and slowly moving into a buyers’ market,” said Lawrence Yun, chief economist of the National Association of Realtors.
The shoe that still needs to drop is a decline in mortgage rates, which many analysts believe Americans are waiting to see happen before they buy homes or put their homes on the market to search for new ones.
Average 30-year-old mortgage rates are expected to end 2024 between 6.6% and 6.7%. They reached a high this year of 7.22% in May after surging to 8.45% in October 2023, the highest mark since the turn of the century.
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