Luxury homes are increasing in value at twice the rate of other homes, according to a new analysis from the real estate website Redfin. A typical luxury home sold for $1.17 million in the fourth quarter of 2023, setting a new record. Luxury home prices were up 8.8% in the last three months of the past year compared with 2022.

What You Need To Know

  • Luxury homes are increasing in value at twice the rate of other homes, according to Redfin

  • A typical luxury home increased 8.8% in price in the last quarter of 2023 compared with a year earlier

  • Prices for non-luxury homes increased 4.6% in the same timeframe

  • Luxury homes purchased with all cash hit a new record of 46.5%

“A lot of luxury buyers are coming in with cash, snapping up expensive homes,” Redfin Premiere agent Heather Mahmood-Corley said in a statement Wednesday. “High-end homes are selling fast, especially in desirable areas like luxurious Scottsdale or Tempe, which West Coast transplants love because it’s centrally located.”

Almost half of luxury homes are purchased with all cash. In the fourth quarter, a record 46.5% of luxury homes were purchased with cash compared with 40% a year earlier.

Paying with cash nullifies the effects of higher mortgage rates, which have a more dramatic effect on the rest of the housing market because they increase interest payments.

Prices of non-luxury homes also increased, but at half the pace compared with luxury properties. Prices were up 4.6% in the fourth quarter of 2023 compared with a year earlier to a record $340,000.

Redfin characterizes luxury homes as those that are estimated to be in the top 5% of their metro area’s market value. A non-luxury home is in the 35-65% range.

Redfin said the brisk pace of price increases for luxury homes was driven in part by an increase in listings. In the fourth quarter of 2023, 19.7% more luxury homes were newly listed compared with the year prior, while new non-luxury home listings fell 3%.

Redfin anticipates more listings and sales of luxury homes in 2024 as sellers seek to capitalize on record-high prices.

“More luxury listings will temper price growth as the year goes on,” Redfin senior economist Sheharyar Bokhari said in a statement. “Overall, that’s a good thing for the high-end market. Sellers will still fetch fair prices, buyers will have more to choose from and sales should tick up.”

The median sale price of luxury homes increased the most in Newark, N.J. and saw the biggest declines in Austin, Texas. The total number of luxury homes listed for sale increased the most in Austin, Texas and fell the most in Detroit, Mich.

Las Vegas saw the largest increase in the number of luxury home sales (33.9%), while New York City saw the biggest drop (21%).

The most expensive home sold in the U.S. in the fourth quarter of 2023 was a $79 million luxury property in Miami. Three of the top five most expensive homes sold late last year were in New York City.