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Residential
New York

Foreign buyers remain absent from U.S. housing market

Spending rose last year due to high prices, but travel restrictions dragged share of purchases to new low

(Illustration by Steven Dilakian for The Real Deal with Getty Images)
(Illustration by Steven Dilakian for The Real Deal with Getty Images)

The share of U.S. homes purchased by foreign nationals — a potentially critical pool of buyers as rising interest rates threaten to slow domestic spending — has tumbled to a more than twelve-year low.

Foreign nationals bought 98,600 properties from April 2021 through March 2022, according to the National Association of Realtors, an annual decrease of 8 percent and the lowest since the NAR began tracking such purchases in 2009.

High home prices meant foreign buyers spent slightly more in aggregate — $59 billion, compared to $54.4 billion from April 2020 to March 2021 — but their share of the overall dollars spent on U.S. homes declined to 2.6 percent, down from 2.8 percent the year before and 10 percent in 2017.

“For the second year in a row, restrictions and general caution tied to international travel during the pandemic slowed home buying by wealthier foreign buyers,” said NAR Chief Economist Lawrence Yun. “Even so, domestic home buying demand was exceptional and, therefore, boosted home sales nationally.”

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The report is based on an online survey of NAR members that garnered just under 9,400 responses. The findings reflect a well-documented trend in the real estate market: Home prices soared in 2021 across the country as supply fell and demand intensified.

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The average home sold for $374,300 during the same period, a 10 percent annual increase, and foreign buyers generally skewed toward the higher end of the market, spending an average $598,200.

“Affordability challenges along with the inability to find the right property were the top reasons given for prospective international buyers who showed interest but ultimately did not purchase a home in the United States,” said Yun.

Florida remained the top destination for foreign buyers for the 14th year in a row, accounting for 24 percent of all purchases. California ranked second, followed by Texas, Arizona and New York and North Carolina, which tied for fifth.

Buyers from China and Canada remained first and second in dollar volume at $6.1 billion and $5.5 billion, respectively, for the ninth year in a row. Buyers from India, Mexico and Brazil rounded out the top five.

Some 44 percent of foreign purchases were all-cash transactions, compared to 24 percent of overall existing-home sales, something that could prove crucial in the year ahead as interest-rate sensitivity curtails demand.

“Due to rising interest rates, overall home sales will decline in the U.S. this year. Foreign buyers, however, are likely to step up purchases, as those making all-cash offers will be immune from changes in interest rates,” Yun said. “In addition, international flights have increased in recent months with the lifting of pandemic-related travel restrictions.”