The typical U.S. luxury home sold for a record $1.17 million during the fourth quarter of 2023, according to new data from Redfin (NASDAQ:RDFN), an 8.8% year-over-year increase. In comparison, prices of non-luxury homes increased at half the pace, rising 4.6% year-over-year to a record $340,000.
Sales of luxury homes dropped 1.7% year-over-year in the fourth quarter, the smallest decline since the middle of 2021. For non-luxury homes, sales were down by 8.1% from the previous year, the smallest downturn the start of 2022.
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. Nearly half (46.5%) of the fourth quarter’s luxury purchases were made in cash, up from 40% a year earlier.
Redfin attributed the increase in luxury home prices to proof that affluent homebuyers and sellers are becoming more active in the housing market. New listings of luxury homes jumped 19.7% year-over-year in the fourth quarter, the biggest increase in over two years, which brought the number of new luxury listings to just under 53,000, comparable to fourth-quarter levels in pre-pandemic 2018 and 2019.
“More luxury listings will temper price growth as the year goes on,” said Redfin Senior Economist Sheharyar Bokhari. “Overall, that’s a good thing for the high-end market: Sellers will still fetch fair prices, buyers will have more to choose from and sales should tick up.”