Sales of U.S. homes to foreign buyers, including those from China, Canada, and other countries, have hit a record low in over a decade. According to a recent report by the National Association of Realtors, only 54,300 previously owned U.S. homes were purchased by non-U.S. citizens in the 12 months ending in March, marking a significant 36% decline from the previous year.
The total value of these transactions during the period amounted to $42 billion, reflecting a 21.2% decrease compared to the prior year. The decline in foreign purchases can be attributed to various factors, including the challenges faced by both international and domestic buyers such as limited inventory, higher mortgage rates, and affordability concerns.
NAR's chief economist highlighted that the stronger U.S. dollar has further deterred foreign buyers, making U.S. homes more expensive for them. The housing market in the U.S. has been struggling since 2022, with existing home sales plummeting to a nearly 30-year low due to rising mortgage rates.
With the average rate on a 30-year mortgage hovering around 7%, homebuyers' purchasing power has been constrained. Additionally, the supply of homes for sale remains low, leading to increased competition and soaring home prices.
Foreign buyers, in particular, have to consider the impact of a stronger U.S. dollar on their purchasing decisions. The report revealed that all-cash sales accounted for half of the international buyer transactions, compared to just 28% for all existing-home buyers.
Florida emerged as the top destination for international homebuyers, attracting 20% of all foreign purchases, followed by Texas (13%), California (11%), and Arizona (5%). Notably, buyers from China and Mexico each represented 11% of purchases, while Canadians topped the list at 13%.
Despite the challenges faced by foreign buyers, the U.S. housing market continues to be a sought-after destination for international investment, albeit at reduced levels compared to previous years.