Foreign purchases of U.S. homes slid for a fifth straight year as the pandemic continued to limit international travel and the dollar strengthened.
Foreigners bought 98,600 U.S. homes in the year ended in March, down 7.9% from the prior year, according to a report released last week by the National Association of Realtors.
That is the lowest level on record since NAR began collecting the data in 2009.
But the dollar volume of residential real estate purchased by international buyers rose 8.5% to $59 billion, reflecting a large increase in U.S. home prices, NAR said.
Purchases by foreign buyers made up 1.6% of existing-home sales in the year ended in March.
The U.S. housing market has boomed in the past two years, as buyers competed fiercely for a limited number of homes on the market. One silver lining for domestic buyers was the reduced competition from overseas, said Lawrence Yun, NAR's chief economist.
Mr. Yun expects foreign investment in U.S. real estate to increase now that it is easier to travel to the U.S. and the supply of homes on the market is increasing.
"With domestic buyers getting priced out from higher mortgage rates, I think the foreigners will step in," he said.
The most popular destination for foreign buyers in the year ended in March was Florida, followed by California, Texas, Arizona and New York.
In Manhattan, real-estate agent Parisa M. Afkhami said her international clients were eager to visit this spring, after the U.S. relaxed travel restrictions for vaccinated foreign visitors and the wintertime Covid-19 surge died down.
"There was a lot of pent-up demand," she said.
A stronger dollar has made U.S. properties more expensive to foreign buyers. The WSJ Dollar Index, which tracks the dollar against a basket of other currencies, increased 4.04% in the year ended in March and has continued rising since.
Foreign investment in U.S. housing peaked in the year ended March 2017 at $153 billion.
Chinese buyers accounted for the biggest volume of international purchases in the year ended in March, at $6.1 billion, but their investment has dropped sharply from a peak of $31.7 billion in 2017 due to Chinese government control over foreign purchases.
Canadians were the top foreign buyers by number of homes purchased in the year ended in March.
Foreign buyers can have an outsize effect on the housing market in certain cities where they make up a larger proportion of buyers, including New York and Miami.
The median purchase price for foreign buyers in the year ended in March was $366,100, NAR said, compared with $355,700 for all U.S. sales of previously owned homes in the same period.
About 57% of foreign buyers in the past year were recent immigrants or foreigners who live in the U.S. Non-residents tend to buy U.S. homes as rental properties or vacation homes, and they are more likely to pay in cash, according to NAR.
