Top 5% of housing market has largest declines in price growth
Volatility in the stock market caused the growth in the top 5% of average home sale prices to slow more than the rest of the market, according to Redfin.
While luxury home sale prices increased year-over-year by 3.2% in the third quarter of 2018, the rate of annual increases was the lowest since 2016's fourth quarter. The average sales price in the top 5% of the market actually dropped 5.9% from the quarter prior. The average sales price for homes in this top bracket settled at about $1.7 million for the quarter.
"A great deal of the slowing price growth among luxury homes can be explained by the stock market, a strong indicator of luxury homebuyers' wealth, or at least their perceived wealth," Redfin Chief Economist Daryl Fairweather said in a press release.
"The stock market fluctuations that began last quarter likely caused some uncertainty among wealthy individuals, which has made luxury buyers more sensitive to price. The swings many people have been watching in their stock portfolios have only grown more frequent in recent weeks, so we expect this trend of slowing luxury home price growth to continue at least into the end of the year," Fairweather continued.
The remaining 95% of the market had a 3.6% growth in average annual home sales price, the lowest since the second quarter of 2016. It also had a quarter-over-quarter decline, though much less stark than the luxury houses, only going down 1.4%. The average sales price for the bottom 95% was $343,000 in the third quarter.