During the third quarter of this year, luxury home prices rose 3.2 percent year-over-year to an average of $1.7 million, according to the report by Redfin.
The third-quarter growth was the lowest growth rate since the fourth quarter of 2016, when prices were up 1.1 percent from a year earlier, Redfin said.
According to the report, the average price for the bottom 95 percent of homes during the third quarter was $343,000, up 3.6 percent compared with one year ago, but down from the second quarter’s 5.1 percent growth rate.
“A great deal of the slowing price growth among luxury homes can be explained by the stock market, a strong indicator of luxury homebuyers’ wealth, or at least their perceived wealth,” Redfin Chief Economist Daryl Fairweather said in a release. “The stock-market fluctuations that began last quarter likely caused some uncertainty among wealthy individuals, which has made luxury buyers more sensitive to price.”
“The swings many people have been watching in their stock portfolios have only grown more frequent in recent weeks, so we expect this trend of slowing luxury home price growth to continue at least into the end of the year,” Fairweather added.
During the quarter, Redfin said luxury homes went under contract after an average of 65 days on market, eight fewer days than one year ago, and tied with the second quarter for the fastest pace on record since Redfin began tracking this metric in the first quarter of 2009.
Redfin said the third-quarter market for non-luxury homes also heated up, with homes spending an average of 49 days on market, nine fewer days than last year.
“We have seen homes go under contract faster every year since 2015. Buyers are able to look at more homes more quickly in part thanks to real estate technology,” Fairweather said. “For example, a potential homebuyer can use Redfin’s website to go on virtual tours, or immediately book a home tour using Redfin’s book-it-now feature.”
The report said luxury homes sold fastest in San Jose, Calif. (19 days); followed by Ashburn, Va. (23 days); Oakland (28 days); Seattle (29 days); and San Francisco (44 days).
Redfin said cities in Florida and Nevada saw the largest increases in luxury homes prices during the third quarter. The report said luxury homes prices during the quarter increased 54.5 percent in West Palm Beach, Fla.; 29.6 percent in Reno, Nev.; 26 percent in Boca Raton, Fla.; and 22.5 percent in Miami.
“There are a lot of people selling average/modest multi-million dollar homes in the Bay Area and buying true luxury homes in Reno,” Jaime Moore, a Redfin agent said. “Buyers coming from the Bay Area find themselves with strong purchasing power and are able to easily afford luxury homes in Reno.”