The rich keep buying, but luxury-home prices soften

CNBC
Updated
The wealthy continued their buying spree of luxury homes in the second quarter, but there are signs that prices may be nearing a top.

The wealthy continued their buying spree of luxury homes in the second quarter, but there are signs that prices may be nearing a top.

The CNBC Luxury Real Estate Report, compiled by RedFin, found that sales of homes priced at $1 million or more increased 14 percent over the same quarter a year ago to 24,064 homes. Sales of homes priced at $5 million or more jumped 20 percent to 584. (The report tracks sales in major metro areas measured by RedFin, but not New York City).

Still, prices for luxury real estate seem to be getting a bit rich, even for the rich. Prices for million-dollar-plus homes were flat, and prices for homes priced at $5 million or more fell 1.2 percent. The decline marks the second-straight quarter of price drops.

At the same time, inventory is creeping up. There are now 65,000 million-dollar homes for sale in the U.S. and more than 4,000 homes priced at $5 million or more, 8.5 percent.

Nela Richardson, chief economist for RedFin, said weakness overseas may be reducing the number of foreign buyers, who are less price-sensitive since they are often looking for a place to hold their cash.

"There are a lot of global issues playing out," she said. "We had Greece, China and Western Europe. And we saw retrenchment in South America. So all over the globe, foreign buyers pulled back a bit."

She added that even the wealthiest buyers will balk at prices if they become too high.

"No matter what the budget is, no one wants to be the person who bought at the top of the market," Richardson said.

The most expensive home sold in the quarter was in Holmby Hills, California—a 15,000-square-foot mansion with 10 bedrooms, 12.5 baths and seven acres. It sold for nearly $59.4 million.

The biggest sale over asking price was a fixer-upper in San Francisco that was listed for $6.3 million and went for $11 million.

Yet all three of the biggest mansion discounts in the quarter were also in the Bay Area. In Belvedere, California, a home that listed for $28.8 million sold for $10.5 million.