Sales of high-end homes climbed 41.5% year over year in the third quarter, according to online real estate broker Redfin (NASDAQ:RDFN), the largest year-over-year jump since at least 2013.
In a news release Monday, Redfin said that sales of luxury homes, defined as the top 5% of market values, as well as sales of second- and third-tier houses climbed year over year, while sales in the bottom two buckets fell by 4% each. The median sale price of a top-tier luxury home in the U.S. in the quarter was $862,700, up 6.5% year over year, while the median price of a house in the bottom tier was $90,000.
In a typical downturn, it is the luxury market that takes the biggest hit, but as Redfin chief economist Daryl Fairweather noted, “This isn’t a normal recession.” Changes in behavior driven by the coronavirus pandemic are pushing more high-end buyers into the market, while keeping first-time buyers away.
“Remote work, record-low mortgage rates, and strong stock prices during the pandemic are allowing America’s wealthy families to gobble up expensive houses with home offices and big backyards in the suburbs,” Fairweather said. “Meanwhile, scores of lower- and middle-class Americans have lost their jobs or are still renting in the city because they’re essential workers and have to commute into work, so they’re unable to reap the benefits of homeownership.”
The number of homes for sale in the luxury bracket climbed 8.4% year over year, while the inventory of homes available for sale in the bottom three tiers fell by 7.9%, 7.6%, and 4.8 %, respectively.
Houses across the spectrum are selling faster than ever, with the median days on the market falling for every price tier.