Ongoing housing shortages and rising home prices are prompting international buyers to pause in their recent homebuying sprees in the United States. International sales in the U.S. totaled $121 billion from April 2017 to March 2018, a 20 percent decline from a year ago, the National Association of REALTORS® reports.
Foreign buyers and recent immigrants accounted for 8 percent of existing home sales, a decrease from 10 percent during the 12-month period that ended March 2017, according to NAR’s 2018 Profile of International Transactions in U.S. Residential Real Estate.
“After a surge in 2017, we saw a decrease in foreign activity in the housing market in the latest year, bringing us closer to the levels seen in 2016,” says Lawrence Yun, NAR’s chief economist. “Inventory shortages continue to drive up prices, and sustained job creation and historically low interest rates mean that foreign buyers are now competing with domestic residents for the same, limited supply of homes.”
Foreign buyers usually purchase properties that are pricier than the average existing home. The median price for a foreign buyer was $292,400 compared to a median price of $249,300 for all existing homes. Chinese buyers tend to purchase the most expensive properties in the U.S. at a median price of $439,100.
Five countries comprised nearly half—49 percent—of the dollar volume of purchases by foreign buyers: China, Canada, India, Mexico, and the United Kingdom. China—for the sixth consecutive year—continued to have the largest dollar volume of purchases. Still, Chinese buyers’ involvement in the market decreased; they purchased an estimated $30.4 billion in residential property in the U.S., a drop of 4 percent from last year.
The highest amount of foreign buying activity in the U.S. continues to be centered on three states: Florida (19 percent); California (14 percent); and Texas (9 percent).
International buyers report buying a property in the U.S. for numerous reasons, but the most frequent reason, at 52 percent, is for a primary residence, according to the report. However, Chinese buyers were most likely to purchase a home in the U.S. for student housing, while Canadian buyers were the most likely to purchase a property as a vacation home. Indian buyers were the most likely to purchase a U.S. property to serve as their primary residence.
