Prices for luxury homes during the quarter averaged $1.71 million, a 4.9% increase from the year-ago quarter. This compares to a $336,000 average price for non-luxury homes, a 5.3% gain from third-quarter 2016 prices.
According to Redfin, the price increase was likely driven by a sharp decline in the number of luxury homes on the market. The analysis tracks home sales in more than 1,000 US cities and defines the luxury market as the top 5% most expensive homes sold in the city in each quarter.
The report found that there were 18.1% fewer homes for sale price at or above $1 million compared to third quarter last year. The decline represents the second-straight quarter of declines in the number of high-end homes for sale.
The inventory of luxury homes, or those priced at or above $5 million, also declined year-over-year. The 19% in third quarter marks the first quarter in which the inventory fell year over year since the report was started in 2014.
“There is still strong buyer demand for high-end homes,” Redfin Chief Economist Nela Richardson said. “Despite declining inventory, luxury sales soared in the third quarter. Sales of homes priced at or above $1 million were up 11% from a year ago, while sales of homes priced at or above $5 million were up almost as much at 10%.”
Redfin also found that homes in the market segment are being sold faster this quarter. The typical luxury home found a buyer in 70 days, four days sooner than they did in the third quarter of 2016.
Young Wall Street professionals don't want mansions
Luxury home prices outpacing rest of the market
Luxury home prices shot up in the third quarter as the inventory shortage hit the market segment, according to the luxury market report released by Redfin.