Inventory Shortage Hits the Luxury Market, Sending Prices Up 4.9 Percent in the Third Quarter

Luxury home prices rose 4.9 percent in the third quarter of 2017 compared to last year, to an average of $1.71 million. The analysis tracks home sales in more than 1,000 cities across the country and defines the luxury market as the top 5 percent most expensive homes sold in the city in each quarter. The average price for non-luxury homes was $336,000, up 5.3 percent compared to a year earlier.

A sharp decline in the number of luxury homes on the market likely contributed to the price increase. The number of homes for sale priced at or above $1 million fell 18.1 percent compared to the same period last year, marking two consecutive quarters of a decline in the number of high-end homes for sale.

The number of homes priced at or above $5 million saw a similar decline at 19 percent. This marked the first quarter in which luxury inventory fell year over year since Redfin began reporting on the luxury market in 2014.

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