Jul
International purchases of US homes have plummeted to a record low as foreign buyers grapple with the strong dollar and a severe shortage of available properties. According to the National Association of Realtors (NAR), non-U.S. citizens bought just 54,300 previously owned homes in the country during the 12 months through March. This marks a significant 36% decline from the same period a year earlier. It is also the lowest number since NAR began tracking these transactions in 2009.
Foreign Investment Declines Sharply
The total investment by foreign buyers in existing U.S. homes fell to a 15-year low, dropping 21% to $42 billion. The data underscores the challenges faced by international Purchases. They are contending with a persistently strong U.S. dollar, which has significantly eroded their purchasing power. In a competitive housing market, this has limited their options and deterred many from making investments.
Economic Factors at Play
“The strong U.S. dollar makes international travel cheaper for Americans but makes U.S. homes much more expensive for foreigners,” Lawrence Yun, NAR’s chief economist, explained in the report. “It’s not surprising to see a pullback.” The strength of the dollar means that foreign buyers are getting less value for their money. This has led many to sit on the sidelines rather than commit to purchasing property.
Inventory Shortage Exacerbates the Issue
The situation is further compounded by a severe inventory shortage that has also frustrated domestic buyers in recent years. Many homeowners are clinging to pandemic-era low-interest mortgages, keeping thousands of potential listings off the market. This shortage has driven up prices for the properties that are available. It has made it even harder for international buyers to find affordable options.
US Hiring and Wage Growth Decelerate in June as Unemployment Rate Climbs
US hiring and wage growth decelerated in June, while the unemployment rate climbed to its highest point since late 2021.
Rising Costs for Foreign Buyers
Despite the decline in the number of transactions, international buyers paid a median of $475,000 for U.S. homes purchased in the 12 months through March. This amount marks a record high in NAR’s data. Canadians led the way, accounting for 13% of foreign purchases. They were followed by buyers from Mexico and China, each with 11%, and India with 10%.
Popular Destinations for International Buyers
Florida remained the top destination for foreign home purchases, making up 20% of the transactions. Texas followed with 13%, and California accounted for 11%. These states continue to attract international buyers due to their appealing climates, economic opportunities, and established expatriate communities.
Cash Transactions on the Rise
While domestic buyers are often hindered by high mortgage rates, foreign buyers are more likely to pay in cash. NAR reported that half of all international purchases used cash exclusively, which is nearly double the rate among all existing-home buyers. This trend indicates that, despite the challenges. Foreign buyers who invest in US real estate are doing so with significant financial resources.
The combination of a strong U.S. dollar, a competitive housing market, and limited property inventory has created a challenging environment for international buyers. As these factors continue to play out, the trend of declining foreign investment in U.S. homes may persist.
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