The effects of rising home prices and low inventory in the U.S. housing market are not only being felt domestically. The National Association of Realtors' (NAR’s) annual “Profile of International Transactions in U.S. Residential Real Estate” report found that those same nagging market conditions led to a 21 percent decline in foreign home purchases in the United States this spring, compared to a year earlier.
According to the survey, foreign buyers and recent immigrants accounted for 8 percent of the $1.6 trillion existing home sales in March. That's down from 10 percent over the 12-month period that ended March 2017.
The data, however, may need a grain or two of salt. Lawrence Yun, Chief Economist at NAR, said that after a surge in 2017, the market steered closer to levels seen in 2016.
“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,” Yun said.
Five countries accounted for half the international dollars pumped into U.S. purchases. More than half of those dollars came from China, which spent $30 billion on U.S. real estate in March, according to NAR. Canada, India, Mexico, and the United Kingdom combined spent just over $29 billion on U.S. properties.
Chinese buyers purchased the most expensive properties, with a median price of $439,100, according to the report. But foreign buyers do tend to veer towards more expensive tastes. The median price for a foreign buyer was $292,400, compared to the median price for all existing homes, which was $249,300, the report stated.
As is the norm, Florida and California were the states most foreign buyers bought in. Together, a third of foreign-bought properties were in these two states, the report indicated. Another 9 percent was purchased in Texas and another 10 percent between Arizona and New York.
In terms of total units bought, China also led the pack at 40,400 units. Canadian investors bought 7,400 units, followed by Mexican investors, who bought 20,200. India and the U.K. Purchased about 24,000 units between them.