The luxury housing market lost momentum in April as financial uncertainty prompted many high-end buyers and sellers to hold off on transactions, according to a new report from Zillow.
Defined as the top 5% of home values in each region, the typical luxury home in the U.S. is now valued at about $1.8 million.
Despite a slowdown in market activity, prices have continued to rise, with luxury home values increasing 2.7% year over year — nearly double the 1.4% growth seen in the broader housing market.
“Despite a slower market, home prices have continued to climb — a promising sign for sellers considering listing their properties,” Orphe Divounguy, senior economist at Zillow, said in a statement.
“Luxury home values, in particular, have remained resilient, even as both buyers and sellers took a more cautious approach after the April stock market volatility.”
March momentum doesn’t last
The slowdown follows a brief uptick in March. Luxury homes going under contract rose more than 30% from February to March, but activity dipped sharply in April.
Contracts fell by 12% month over month — a reversal of the typical spring trend. In April 2024, contracts rose 10% from March.
New listings also dropped this year — down 5% from March and 3.4% from April 2024.
“Global economic conditions and stability also play a significant role,” Divounguy said. “As economic conditions begin to stabilize, the luxury housing market could regain some momentum.”
While luxury buyers often have more liquidity and equity than those in the broader market, high mortgage rates, elevated home prices and general economic uncertainty continue to weigh on their decisions, Zillow said.
Still, limited inventory and the desirability of high-end properties — which often offer nearly 3,500 square feet of space and sit on large lots — are keeping values afloat in many markets.
Regional price variances
Luxury prices vary widely across the country.
Among the 50 largest metro areas, the most expensive luxury markets are in California. San Jose tops the list with typical luxury homes valued at nearly $6 million, followed by Los Angeles ($5.1 million) and San Francisco ($4.8 million).
At the lower end, Buffalo, New York, posted the lowest typical luxury value at just over $835,000.
Several Midwestern cities led in luxury price growth. Annual gains were strongest in Cincinnati (+7.3%); Columbus, Ohio (+6.8%); Chicago (+6.3%); Cleveland (+6.1%) and Las Vegas (+6.1%).
Meanwhile, luxury home values declined in Austin (-2.1%), Tampa (-1.7%) and Miami (-0.5%).
Luxury homes in Ohio also sold the fastest. In Cincinnati and Columbus, these homes typically went under contract within five days.
Nationally, the typical luxury home is worth about five times the value of a mid-market home — down slightly from a 5.5-to-1 ratio in 2020, suggesting a modest narrowing of the price gap.
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