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Luxury Home Sales Maintain Growth in Q3

Two-Story-HouseEven as total home sales fell year-over-year for another quarter, the luxury market continued to outperform in Q3, according to Redfin.

Nationwide, home sales fell 1.2 percent in the third quarter compared to the same period last year, the brokerage said this week. Sales have been down year-over-year for every quarter so far in 2014.

At the same time, sales of homes priced at at least $1 million continued to lift, rising 9 percent over the past year.

"That's no surprise, given that the luxury housing market was the first to recover after the crisis and has been going strong ever since, benefitting from a booming stock market, low interest rates and overseas investment," said Nela Richardson, chief economist at Redfin.

Nevertheless, growth in the luxury market remains below the double-digit numbers recorded all throughout last year and earlier this year as foreign investment in the U.S. housing market wanes.

As a result of declining international demand, many of the nation's top luxury markets are now seeing a dramatic decline in sales of million-dollar-plus homes—and while that segment only accounts for about 3 percent of the national housing market, it means a lot for those areas.

"This sector of the market, particularly in the places that have typically had strong foreign interest, will need traditional (and well-heeled) buyers to offset disappearing demand from international investors," Richardson said.

Not surprisingly, California's more active housing metros topped the list for million-dollar home sales in Q3, led by San Francisco, Los Angeles, and San Jose—the latter of which saw a 43.7 percent jump in luxury sales over the last year. San Diego and Newport Beach also made it into the top 10, ranked at Nos. 5 and 10, respectively.

On the other hand, a few of the nation's more affordable markets also happened to be among the top areas for luxury sales, including Chicago and Houston.

"The luxury home market in Houston is thriving in large part because of the strong and diverse job market," said Tara Waggoner, a Redfin agent. "Energy and technology companies like Exxon Mobil are hiring employees away from the coasts. Those people are shocked at how much home they can get for $1 million in Houston."

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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