Recent gains in the stock market have driven a surge in the luxury market
Due to high mortgage rates, some home buyers are remaining out of the U.S. housing market, while other purchasers are entering the luxury market.
In January 2022, the annualized pace of sales of second-hand homes was 38% higher at 4 million sales, according to the National Association of Realtors®. In the meantime, sales of luxury homes costing $1 million or more in January increased by 27% over the previous year, as purchasers profited from the 34% increase in the S&P 500 stock index over that same period.
According to the S&P CoreLogic Case-Shiller index, house values have increased by 46% since January 2020, so high mortgage rates are not the only expense deterring prospective home buyers. According to Zillow, the average price of a home in the US is currently close to $348,000. The increase in cash payments for homes in the luxury market has been fueled by stock market gains, which has lessened concerns about high mortgage rates.