That’s provided the U.S. doesn’t tip into a recession. If the economy is slowed too much by Federal Reserve rate hikes, prices could fall even more dramatically, Moody’s warned.
The result is that some luxury home buyers have been scared off by home price declines and “are likely moving their money into other investments, like bonds, which may offer a better rate of return,” Redfin reported.
So far, expensive California markets are leading the deterioration in high-priced home sales.
Oakland, Calif., luxury-home sales plunged 63.9% year over year during the three months ending Aug. 31, the largest decline among the 50 most populous U.S. metropolitan areas , Redfin said.
Homes sales in San Jose and San Diego also decreased more than 55%, the firm said.
n fact, luxury-home sales prices are growing at half the pace they were a year ago, as demand cools, Redfin said.
The median sales price of luxury homes rose 10.5% year over year to $1.1 million during the three months ending Aug. 31, compared with an annual increase of 20.3% a year earlier and a record gain of 27.8% during the three months ending June 30, 2021.
Price growth in the luxury market is also likely decelerating in part because the supply crunch is easing overall, which means house hunters have more options to choose from and less competition, Redfin said.
Luxury-home supply is still down from a 202, but has increased from the start of the year. The number of luxury homes on the market is up 39.2% from a record low of roughly 121,000 during the three months ending Feb. 28, according to firm statistics.
“While listings are declining in expensive coastal markets including Oakland and San Diego, they’re increasing overall. Nationwide, new listings of luxury homes rose 1.2% year over year during the three months ending Aug. 31, while new listings of non-luxury homes fell 5.9%,” Redfin reported.