The overall sales of luxury real estate have increased more than 2% in the first quarter of the year, according to a new report.
Sales of luxury properties---defined as those in the top 5% of their metro area based on market value---have increased by 2.1% year-over-year in the first quarter, per Redfin. That is the biggest gain posted since August 2021.
During the first quarter, the median price of luxury homes sold in the United States was a record $1,225,000. This marked an 8.7% from last year.
Furthermore, the report noted that many luxury home buyers are purchasing properties in cash. At least 46.8% of luxury homes bought in the three months ending February 29 were paid for in cash. That is the highest share of all-cash transactions in the luxury real estate market in a decade. It also marks a 44.1% increase from last year.
"People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise," David Palmer, a Redfin Premier agent in the Seattle metro, said in the report. "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."
How the Rest of the Real Estate Market Compares
In comparison, overall real estate sales fell 4% in the U.S. in the first quarter. Prices of non-luxury homes only rose by half the pace year-over-year, up only 4.6% to a median of $345,000. It is, however, a record high.
Elevated mortgage rates have also driven down demand for the average home buyer, especially as the rates for the 30-year fixed term rose to 7.1% in the week ending April 18, according to Freddie Mac.
Additionally, the supply of non-luxury homes declined by 2.9% over the past year, which also contributed to rising prices. In comparison, the inventory of luxury homes rose 12.6% from a year earlier. However, it is worth noting that the supply of luxury homes is still below pre-pandemic levels.
