Redfin Reports the Typical U.S. Luxury Home Costs More Than Ever Before

(NASDAQ: RDFN) — The median-priced U.S. luxury home sold for a record $1,225,000 in the first quarter, up 8.7% from a year earlier, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Prices of non-luxury homes rose at roughly half the pace; they were up 4.6% to a median of $345,000, also a record high.

Redfin defines luxury homes as those estimated to be in the top 5% of their respective metro area based on market value, and non-luxury homes as those estimated to be in the 35th-65th percentile based on market value.

Luxury prices are rising largely because demand for high-end homes has held up better than demand for middle-of-the-road homes. Sales of luxury homes are on the upswing, partly because many high-end buyers are undeterred by high mortgage rates, with the share of luxury homes bought in cash sitting at record highs. New listings of luxury homes are soaring—but not enough to curb the price growth that comes with rising demand; the total supply of luxury homes is still far below pre-pandemic levels.

“People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise,” said David Palmer, a Redfin Premier agent in the Seattle metro, where the median-priced luxury home sells for $2.7 million. “They’re ready to buy with more optimism and less apprehension. It’s a similar sentiment on the selling side: Prices continue to increase for high-end homes, so homeowners feel it’s a good time to cash in on their equity. Even though mortgage rates remain elevated and demand isn’t as high as it was during the pandemic, many homebuyers and sellers feel the worst of the housing downturn is behind us.”

Luxury home sales rise for first time since 2021 as record share of affluent buyers pay cash

Sales of luxury homes rose 2.1% year over year in the first quarter. Luxury sales started posting year-over-year increases in January for the first time since August 2021.

Sales of non-luxury homes decreased 4.2% year over year. Non-luxury sales haven’t posted an increase since the end of 2021.

Sales are growing for luxury homes and declining for non-luxury homes largely because so many affluent buyers are able to pay in cash, meaning today’s elevated mortgage rates don’t deter them from purchasing homes. Nearly half (46.8%) of luxury homes bought during the three months ending February 29 were purchased in cash. That’s the highest share in at least a decade and up from 44.1% a year earlier.