America’s long-running property party has come to a sobering halt.
Sales of luxury homes plunged by a record-breaking 28% during the three months ending August 31, compared to the same period last year, according to a new Redfin report.
Amid exploding interest rates and spiraling economic uncertainty, affluent buyers are now shying away from the priciest homes en masse, the numbers show.
“High-end house hunters are getting sticker shock when they see the impact of rising mortgage rates on paper,” said Redfin Chief Economist Daryl Fairweather.
“For a luxury buyer, a higher interest rate can equate to a monthly housing bill that’s thousands of dollars more expensive,”
Redfin defines luxury homes as being in the top 5% in terms of asking price.
“Luxury goods are often the first thing to get cut when uncertain times force people to reexamine their finances,” Fairweather said.
The 28% free-fall was easily the most precipitous drop ever recorded since Redfin began analyzing the metric in 2012.
The prior mark was 23%, set at the beginning of the pandemic in 2020 as lockdowns took hold and the real estate market seized up.
Sales of non-luxury homes also saw an unprecedented dip of 19.5% over the same stretch, according to the report.
Pricey California cities saw the most marked drops in luxury sales, with Oakland notching a staggering 63.9% slide and San Jose a 59.6% decrease.
Miami, which has seen stratospheric price hikes in recent years, had the third biggest dip in luxury sales at 55%
New York saw a far more modest drop in the category at 11.8%.
While its transfers slowed considerably, Florida still saw massive hikes in median home sale prices in the three months ending August 31.
The Sunshine State had six of the top ten cities with the steepest increases.
Tampa Bay occupied the top spot, with median home prices for the three months ending August 31 up 39.3% compared to the same stretch last year.
New York median sales remained largely flat, registering a 4% uptick during that span.