Million dollar plus home sales dipped by four percent in July compared to one year ago, the National Association of Realtors (NAR) is reporting. On the other hand, entry-level and middle parts of the housing market have seen much more buying activity due to high demand and low mortgage rates.
“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,” said Lawrence Yun, chief economist of the NAR. “The financial markets have stabilized since then.”
However, some experts believe the luxury housing market will continue to stay sluggish.
Jonathan Miller of real estate appraisal and consulting firm Miller Samuel told CNBC that the luxury market “was the first to recover after the financial crisis, but it’s run its course.” He said part of the reason was because the sector was seeing “aggressive pricing” and also because of “excess supply”.
Luxury home values nationwide fell in the first quarter before rising by just one percent in Q2, according to real estate brokerage Redfin. Also notable is that luxury home prices slumped by an enormous 11 percent in San Francisco, and by four percent in Bellevue, Washington. As for the Hamptons, home to the East Coast’s rich and famous, luxury real estate prices there slumped by 2.3 percent in Q2, though sales did increase by 20 percent.
With the luxury real estate sector going through a bad spell, builders are instead switching their focus to entry-level homes, where tight supplies are boosting demand.
“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 said.