Sales of homes priced at or above $2 million fell year-over-year by 3.9 percent in the fourth quarter of 2018, according to new data from Redfin. This represents the first time in more than two years sales of luxury homes have declined on an annualized basis.
But while sales fell, prices rose. The average sale price for luxury homes nationwide rose 4.7 percent annually to an average of $1.77 million in the fourth quarter of 2018. This was up from a 3.2 percent growth rate in the third quarter. In comparison with the rest of the market, home prices grew 4.3 percent to an average of $341,000 in the fourth quarter.
The typical luxury home that sold in the fourth quarter went under contract in 74 days, down from 78 days one year earlier. In comparison, non-luxury homes took 56 days to go under contract in the fourth quarter, down from 63 days one year earlier.
“In the fourth quarter of 2018 there was a lot of economic uncertainty—mortgage interest rates peaked in November, and the stock market was all over the place,” said Redfin Chief Economist Daryl Fairweather. “This may have encouraged luxury sellers to hold on to their real estate assets and also caused luxury buyers to be reluctant to make major home purchases. There's also economic uncertainty abroad. For example, China's economy slowed down at the end of 2018, which may be affecting a segment of U.S. luxury sellers and buyers whose wealth is invested overseas. Finally, it's worth noting that when we're examining the most expensive segment of the housing market nationwide, a disproportionate amount of the movement seen in prices and sales is driven by activity—or lack thereof—in major expensive coastal markets like San Francisco and San Jose, where sales fell by double digits while price growth slowed or reversed at the end of the year.”