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Foreign homebuying activity is dropping in the U.S., even as overall housing demand soars. Foreign investment in American homes has plunged 27% to $54.4 billion—which marks the lowest level in a decade, according to the National Association of REALTORS®’ 2021 Profile of International Transactions in U.S. Residential Real Estate. “The big decline is no surprise, given the pandemic-induced lockdowns and international travel restrictions,” said NAR Chief Economist Lawrence Yun. “Yet, even with the absence of foreign buyers, the U.S. housing market strengthened solidly.”
Overall, international buyers made up 2.8% of the $5.8 trillion in existing-home sales from April 2020 through March 2021. Foreign buyers who lived abroad purchased $22 billion worth of existing homes during that time period, which is down 33% from the year prior. Foreign buyers who resided in the U.S. or held visas purchased $32.4 billion worth of existing homes, a 21% decrease from the prior year, according to NAR’s report. The top five countries of origin for U.S. residential sales were:
China ($4.5 billion)
Canada ($4.2 billion)
India ($3.1 billion)
Mexico ($2.9 billion)
United Kingdom ($2.7 billion).
The annual dollar volume for foreign buyers from China, Canada, and Mexico all plunged by at least 50% year over year. “As travel restrictions loosen and foreign students return to U.S. colleges in the upcoming year, there is likely to be some growth in foreign buying,” Yun said. “High home prices and the ongoing lack of inventory could, however, pose a challenge for buyers.”
Top Destinations for Foreign Investors
Florida, which is routinely the top state for foreign buyers, remained number one: The Sunshine State accounted for 21% of all international purchases. According to NAR’s report, the next five popular destinations in the U.S. for foreign buyers were:
New Jersey (4%)
New York (4%)
Higher Home Prices, Suburbia Attraction
Some additional highlights from NAR’s report:
The median existing-home sales price among international buyers is $351,800, 15% more than the $305,500 median price for all existing homes sold in the U.S. Chinese buyers have the highest median U.S. purchase price at $476,500.
All-cash sales comprise 39% of international buyer transactions. More than four out of five buyers from the United Kingdom—82%—make all-cash purchases, which is the highest share among foreign buyers. Indian buyers were the least likely to pay all-cash at 8%.
Forty-three percent of foreign buyers purchased a primary residence in the U.S. Also, nearly half of international buyers purchased a home in the suburbs, and 28% bought a home in an urban area. The percentage of foreign buyers purchasing a home in the suburbs has been gradually climbing over the last six years.
Source: “2021 Profile of International Transactions in U.S. Residential Real Estate,” National Association of REALTORS® (July 26, 2021)