Pending sales of luxury homes dropped by nearly 10 percent in April across the U.S., as increased volatility in the financial markets and widespread uncertainty around President Donald Trump's tariffs are discouraging high-end buyers as much as everyday Americans.
According to a new Redfin report, the April year-over-year drop was the largest decline in the luxury homes market since August 2023. April also saw the lowest level of pending sales in over a decade, the real estate brokerage said, marking an unexpected plunge during a season that is traditionally considered a busy one for both buyers and sellers.
By the end of last year, experts were confident that the housing shortage affecting the U.S. market would finally ease in 2025, helping slow down the vertiginous price growth that characterized the last five years. As they expected, inventory has risen: in April, there were 1,882,415 homes for sale, up 12.5 percent from a year earlier, according to Redfin.
Prices, however, have continued rising: in April, the median sale price of a typical U.S. home was $438,357, up 1.2 percent from a year earlier. Mortgage rates, despite widespread hopes to the contrary, are still historically high: as of May 22, the 30-year fixed-rate mortgage was 6.86 percent, according to Freddie Mac.
This combination of high prices and elevated mortgage rates is still keeping many U.S. buyers to the sidelines of the market. But even those who could afford to buy a home are reconsidering making such a big purchase this year as uncertainty dominates the economic and financial landscape.
Experts have warned that Trump's tariff policies have made it more likely for the U.S. economy to slip into a recession this year, a scenario that would threaten wealthy Americans' investments as well as the financial stability of everyday U.S. households.
As in the non-luxury market, inventory is growing and sales are falling in the luxury market. In April, inventory in the luxury market was 7 percent higher year-over-year in April, the highest level for that month since 2021, while in the non-luxury market it was up by 14.7 percent.
Possibly because they represent a much smaller market, the competitiveness of luxury homes in their market has remained relatively unchanged compared to non-luxury homes. Luxury homes sold in 52 days in April, virtually unchanged from 51 days a year earlier, while non-luxury homes spent 45 days on the market, up from 39 days a year ago.
However, the decline in sales reported in the luxury homes market is much more dramatic than the numbers coming out of the non-luxury homes market. According to recent data from the National Association of Realtors (NAR), existing-home sales were down 2 percent year-over-year in April. However, sales of new single-family homes in the same month, according to Realtor.com, were actually up 3.3 percent year-over-year, as new buildings tend to be cheaper.
"Even though luxury sales are down overall, the most desirable homes are still being snapped up relatively quickly," Redfin Senior Economist Sheharyar Bokhari said in a press release. "That's because many wealthy buyers have the means to weather economic uncertainty and make large purchases without overextending themselves."
That is maybe why, while luxury home sales fell 9.9 percent year-over-year in April, their prices continued rising, Redfin found. The typical U.S. luxury home sold for $1,348,065 last month, up 6.5 percent from a year earlier but down slightly from the record high reported in March.
The biggest price increases were reported in West Palm Beach, Florida, where the median price of a typical luxury home was up 25.8 percent from a year earlier at $4,132,048, Miami, Florida (+22 percent to $4,367,401) and San Jose, California (+20.8 percent to $5,508,743).
Only two metros reported price declines, San Francisco, California (-2.2 percent to $6,092,801), which also saw the biggest increase in sales of the 50 most populous metropolitan areas analyzed by Redfin, and Sacramento, California (-1.1 percent to $1,659,264).
Sheharyar Bokhari said in a press release: "Many luxury buyers are adopting a wait-and-see approach because of volatility across financial markets and shifting tariff policies. These high-end buyers often sell stock to help with down payments, but many pressed pause on their home search when the stock market tumbled in April. As a result, what is usually a fiercely competitive space is cooling."
Meme Loggins, a Redfin Premier agent in Portland, Oregon, where luxury sales are down more than 5 percent from a year ago, said in a press release: "Buyers looking at homes from $1.2 million up are almost non-existent right now. Even in nice areas, high-end homes are selling really, really slow. If I have a buyer who finds the perfect house and is ready to make an offer, they tend to sleep on it for a little, and then they come back to me and say 'nope, I think we'll wait and see if the price comes down.'"
Falling luxury home sales show that even the wealthiest buyers in the U.S. are vulnerable to the same dynamics that are hurting everyday buyers -- high mortgage rates, rising prices and growing uncertainty around the future of the U.S. economy.
While earlier in the year Redfin expected home price growth to slow down but continue throughout 2025, it now believes that home prices in the U.S. will fall by 1 percent on average by the end of the year.