The U.S. luxury home market saw its biggest drop in sales on record in the three-month period ending in November.
Luxury home sales dropped 38.1 percent year-over-year from September to November, according to Redfin. That’s the largest decline reported by the brokerage in its 10 years tracking the market.
Non-luxury home sales also fell by a record amount, declining 31.4 percent during the same period. Both sectors have faced headwinds like high interest rates and high mortgage rates, as well as fears of a recession.
But luxury homes — defined by the report as those in the top five percent based on market value — are among the first goods to be ditched by owners during difficult economic times. The sagging stock market and the luxury sector’s outsized growth in the wake of the pandemic have also taken the shine out of the market for buyers.
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The whole of the U.S. housing market sunk in recent months under elevated borrowing costs amid the Federal Reserve’s efforts to counter inflation. But the Fed appears to have started easing off of big interest rate hikes, with mortgage rates are already falling from highs reached only weeks ago when the average rate pushed past 7 percent.
The rate of price growth in the luxury market is slowing. The median price rose 10 percent year-over-year to $1.1 million, matching the rise for non-luxury homes. In contrast, luxury prices rose 19.9 percent annually for the period ending in April.
Inventory in the luxury market is also less of an issue than it was during the early months of the pandemic. For-sale homes rose 5.2 percent year-over-year, the largest increase in six years. There were 163,000 homes for sale in the luxury market during the three-month period.
Luxury listings, meanwhile, declined 2.9 percent from last year, a significantly smaller drop than that of non-luxury listings.
Long Island’s Nassau County had the biggest annual drop in luxury home sales, down 65.6 percent. A plethora of California metros, including San Jose and Anaheim, also placed in the top five of declining luxury sales, but every market analyzed by Redfin recorded a decline.
San Jose was the only market with a drop in the median sales price of a luxury home, a marginal decline of less than 1 percent. Miami, meanwhile, had the biggest jump at 28.1 percent, followed closely behind by another Florida city, Tampa.