The median sale price of luxury homes jumped 25.8 percent year-over-year in the second quarter, while the median sale price of the most affordable homes rose 18.7 percent, according to a recent Redfin report. For comparison, prices of mid-priced homes grew by 16 percent, and affordable homes by 13.2 percent.
“Home prices and sales plummeted at the beginning of the pandemic but have now more than recovered, especially in the luxury and most affordable price tiers, due to low mortgage rates and strong homebuyer demand during the pandemic,” Redfin Chief Economist Daryl Fairweather said in a release. “Surging prices can be especially problematic for first-time and lower-income homebuyers, but the good news is that the supply of the country’s most affordable homes is growing. That means there could be more homes to choose from and less competition for buyers in that segment of the market.”
Purchases of luxury homes surged 88.2 percent year-over-year in the second quarter, according to the report, while purchases of the most affordable homes rose 56.8 percent. Purchases of homes in other price tiers increased between 30 percent and 45 percent.
Home sales soared across the board during the pandemic as buyers have taken advantage of low mortgage rates and work location flexibility, but sales of luxury and most affordable homes have seen especially large increases.
“With the pandemic eviction moratorium coming to an end and many Americans priced out of homeownership, investors are keen on buying up inexpensive properties and turning them into rentals,” Fairweather said. “A relative abundance of homes hitting the market in both the most affordable and luxury tiers has also enabled purchases in these segments to flourish.”
The number of homes for sale in the most affordable price tier rose 11.3 percent year-over-year in the second quarter. The luxury tier saw supply grow 1.3 percent. Supply in the remaining three tiers either declined or grew less than 1 percent.
“The government’s pandemic mortgage forbearance program is coming to an end, which is likely boosting the supply of America’s most affordable homes,” Fairweather said. “Some homeowners are putting their properties on the market because they’re concerned about being foreclosed upon when forbearance dries up, while other owners of affordable homes are selling because they want to avoid the increase in seller competition that’s likely to occur when forbearance ends.”
Homes also sold faster in the second quarter than a year earlier. The typical luxury home spent 30 days on the market, 34 fewer days than the same period in 2020. The most affordable homes spent 25 days on the market, 17 fewer than a year earlier. Homes in the remaining price tiers spent about two weeks on the market, shorter than they did in 2020.