Sales of U.S. homes to foreign nationals have plummeted to their lowest level in over a decade, hindered by a strong dollar and persistent challenges that have mired the housing market in a prolonged slump. According to a recent report by the National Association of Realtors (NAR), only 54,300 previously occupied U.S. homes were purchased by non-U.S. citizens in the 12 months ending in March. This marks the lowest number of sales to foreign nationals since data collection began in 2009, representing a 36% decline compared to the same period the previous year.
The peak of international home purchases occurred in the 12 months ending March 2017, with 284,500 properties bought, driven in part by a surge in acquisitions by Chinese nationals. However, since 2022, the U.S. housing market has been in a downturn, exacerbated by rising mortgage rates. Existing home sales hit a nearly 30-year low last year, as the average rate on a 30-year mortgage soared to a 23-year high of 7.79%, according to Freddie Mac. Although the average rate has mostly hovered around 7%, this has significantly reduced purchasing power for home shoppers.
Compounding these affordability issues, the supply of homes for sale, while increasing in recent months, remains near historic lows. This has maintained a competitive market environment, pushing home prices to new heights. For international buyers, the situation is further complicated by a strong U.S. dollar, which increases the cost of purchasing properties. The U.S. Dollar Index, tracking the value of the dollar relative to a basket of foreign currencies, has risen 3.9% over the past year.
The NAR, which has tracked foreign buyer data since 2009 and has 1.5 million members, includes buyers from mainland China, Hong Kong, and Taiwan under the category of Chinese buyers. The top destinations for international buyers are Florida, Texas, California, Arizona, and Georgia, accounting for 53% of foreign home purchases. The largest foreign buyer groups come from Canada (13%), China (11%), Mexico (11%), India (10%), and Colombia (4%).
Despite purchasing fewer units, Chinese buyers had the highest average purchase price among international buyers at $1.26 million and the highest median price at $697,900. This preference for high-end markets like California and New York, which made up 25% and 10% of their purchases respectively, contributed to the elevated prices.
As the U.S. housing market continues to grapple with these challenges, the trend of declining foreign investment highlights the broader issues affecting both domestic and international buyers.
