Million-Dollar Sales Soften: Blip or Trend?
September 1, 2016
Sales of homes priced $1 million or above dropped 4 percent in July compared to a year ago, according to the National Association of REALTORS®. The entry-level and middle parts of the housing market, on the other hand, are much more active due to low mortgage rates and high buyer demand, NAR reports.
Read more: Luxury Market 'Not What It Was'
"Existing sales above $1 million were down a bit in July. This was in large part due to the stock market volatility seen earlier this summer leading up to and immediately after Brexit," says Lawrence Yun, NAR’s chief economist. "The financial markets have stabilized since then."
But some housing experts still question whether the luxury sector will remain sluggish.
The luxury market "was the first to recover after the financial crisis, but it's run its course," Jonathan Miller of Miller Samuel, a real estate appraisal and consulting firm, told CNBC. "Part of it is aggressive pricing and part of it is excess supply."
Nationwide luxury home values (homes in the top 5 percent sold in cities) dropped in the first quarter and then rose just 1 percent annually in the second quarter, according to Redfin, a real estate brokerage. Notably, luxury home prices dropped 11 percent in San Francisco and by 4 percent in Bellevue, Wash. In the Hamptons, luxury prices dropped 2.3 percent in the second quarter from a year earlier, but sales were up by more than 20 percent, according to Miller Samuel.
As the luxury sector softens, more builders are turning their attention to the entry level, where supply remains tight.
"We're seeing very robust activity in the entry space and the middle of the market, but we're not seeing it at the top," Miller says.
Source: “Sales of Million-Dollar Homes Swoon,” CNBC (Aug. 31, 2016)
Updated: July 22, 2019