The share of US homes valued at $1M or more stopped shy of a record notched last summer as high mortgage rates and low inventory drove home prices upward in June, a Redfin analysis shows
The share of homes valued at $1 million or more in the U.S. is on this rise again following a low in February, according to an analysis released Friday by Redfin.
The share of home worth $1 million or more rose to 8.2 percent in June, just shy of an all-time high of 8.6 percent a year earlier and up from a 12-month low of 7.3 percent in February 2023, according to the Redfin data.
omes worth $1 million or more are on the upswing because prices are rising again on an annual basis after falling earlier this year, Redfin reported. In July, the median home sale price rose 3 percent, the largest such increase seen since November 2022.
However, prices in the luxury market are rising at a faster pace than the overall market, with the median sale price of luxury homes in the U.S. up 4.6 percent year over year to $1.2 million as of Q2 2023.
Higher mortgage rates have been dissuading homesellers from coming to market, leading to a restricted set of inventory for those buyers who still need to move. The remaining buyers in the market then are competing for what few homes are available and driving prices up, causing many homes that were previously just below $1 million to spill over into $1 million territory.
“The supply shortage is making many listings feel hot,” Redfin Economics Research Lead Chen Zhao said in a statement. “In most of the country, expensive properties that are in good condition and priced fairly are attracting buyers and in some cases bidding wars, mostly because for-sale signs are few and far between right now.”
“Still, there’s no rush to offload high-value homes,” she continued. “Recent economic signals that the U.S. may avoid a broad recession could cause high-end buyers to feel more confident in making a major purchase in the coming months. There may be more demand coming down the pipeline.”
The homebuying boom of 2020 and 2021, which was fueled by pandemic-spurred low mortgage rates and remote work, caused home prices to skyrocket and the share of homes worth seven figures to double since then. In June 2019, just about 4 percent of homes were valued at $1 million or more.
$1M homes see gains in the East, declines in the West
Some select markets on the East Coast are seeing gains in $1 million homes the fastest, including in Bridgeport, Connecticut, where 25.8 percent of homes are worth at least $1 million, up from 23.1 percent the year before. After Bridgeport, Boston, and Newark, New Jersey, logged the largest gains, where $1 million homes have increased from 20.3 percent to 21.5 percent and 8.7 percent to 9.7 percent in the last year, respectively.
Nationwide, the share of homes worth $1 million or more has increased year over year in 55 out of the 99 most populous U.S. metros, Redfin reported. In three metros the number of $1 million homes has remained the same, and in the remaining 41 metros, the share has decreased.
Pricey West Coast markets have seen the greatest declines in $1 million-plus homes the most quickly, with Seattle tallying the sharpest decline from 39.3 percent in June 2022 to 33 percent in June 2023. After Seattle, Oakland, California, and Oxnard, California, saw the steepest declines from 55.1 percent to 49 percent and 40.2 percent to 34.5 percent, respectively.
Los Angeles, San Diego, San Jose, San Francisco, Anaheim, New York and Washington, D.C. also saw annual declines in million-dollar homes.
West Coast markets have experienced a larger decline in those $1 million-and-up properties because of the hard hit those markets took as a result of rising mortgage rates and a slew of tech company layoffs over the past year.
Across parts of the Rust Belt and a few select markets in upstate New York, there are practically no $1 million homes, however. The share of $1 million-plus homes is less than 0.5 percent in Omaha, Nebraska; Dayton, Ohio; McAllen, Texas; El Paso, Texas; Akron, Ohio; Detroit, Michigan; Buffalo, New York, Elgin, Illinois; and Rochester, New York.