Foreign investors seem to be losing interest in the U.S. housing market, according to a recent report by CNBC. Sales of U.S. homes to international buyers fell by 14%, CNBC reported Aug. 2.
"International buyers are pulling back from the U.S. housing market, as high mortgage rates, soaring home prices, a meager supply of homes for sale and a strong dollar all make the purchases much less financially attractive," CNBC reports in the article.
Foreign buyers purchased approximately 84,600 houses in the U.S. between April 2022 and this past March, the fewest since since the National Association of Realtors (NAR) began tracking the sales in 2009 and a 14% drop from the previous year, according to the report. However, the median home price of $396,400 is the highest median price ever recorded by the NAR, CNBC reports.
“Home purchases from Chinese buyers increased after China relaxed the world’s strictest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” Lawrence Yun, NAR’s Chief Economist, said in the report. “A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers.”
China, Mexico, Canada, India and Colombia buyers made up the bulk of investors by number of houses as opposed to dollar volume, with Chinese buyers taking the lead with a highest average purchase price at $1.23 million, according to the report. About 15% of foreign buyers purchased homes worth over $1 million.
“While foreign sales dropped overall, Chinese purchases did make sizable gains,” the CNBC report states. “The total of 2023 Chinese home purchases is the highest since 2018, which was one of the peak years for Chinese international property purchasing, according to Juwai IQI, an Asia-based international real estate technology group.”
The states most attractive to global buyers are Florida, 23%; California, 12%; Texas, 12%; North Carolina, 4%; Arizona, 4%; and Illinois, 4%, CNBC reports.
“Only about one in every 10 Chinese buyers is purchasing purely as an investment, which is a big change from the mid-2010s, when wealthy Chinese consumers looked to diversify their wealth out of China,” Kashif Ansari, Juwai IQI co-founder and group CEO said in the report. “In 2023, the typical Chinese buyer is no longer an offshore investor but is on their way towards becoming an American resident and citizen.”
“Florida, Texas and Arizona continue to attract foreign buyers despite the hot weather conditions during the summer and the significant spike in home prices that began a few years ago,” Yun said in the report.