International home buyer purchases decline.

Purchases of existing homes in the U.S. by international buyers have significantly dropped over the past year due to limited supply and soaring prices.

From April 2023 to March 2024, only 54,300 pre-owned houses, condos, and co-ops were sold to foreign buyers, according to the latest data from the National Association of Realtors (NAR). This represents a 36% decrease from the previous year and the lowest number of foreign sales since data collection began in 2009.

Additionally, international buyers spent just $42 billion on residential properties in the U.S., marking a 21.2% decrease from the previous year. The median sale price for these buyers jumped nearly 20% to $475,000, the highest ever recorded by NAR.

This decline in foreign purchases reflects broader market constraints. In 2023, sales of existing homes hit their lowest level since 1995, primarily due to homeowners holding onto properties to maintain their low mortgage rates obtained before and during the COVID-19 pandemic. The limited inventory has also driven house prices to record highs.

NAR Chief Economist Lawrence Yun noted that the strong U.S. dollar has made American homes more expensive for foreign buyers. "The strong U.S. dollar makes international travel cheaper for Americans but makes U.S. homes much more expensive for foreigners," Yun explained. "Therefore, it’s not surprising to see a pullback in U.S. home sales from foreign buyers."

Additional Challenges

Foreign buyers are also encountering increased restrictions from the U.S. government regarding real estate investments.

Recent legislative actions have aimed to limit foreign ownership of land and real estate. Last week, the Treasury Department proposed a rule granting federal officials the authority to monitor real estate transactions near 59 more military facilities. This rule is expected to be finalized next month after a 30-day public comment period.

This proposal is part of a series of measures by U.S. lawmakers to regulate foreign property investments. For instance, in May, President Joe Biden ordered a group of Chinese nationals to divest from a cryptocurrency mine in Wyoming. In 2023, Florida Governor Ron DeSantis signed legislation prohibiting nationals from China, Cuba, Iran, North Korea, Russia, Syria, and Venezuela from owning agricultural land or real estate near military installations or critical infrastructure in Florida.

Despite these challenges, buyers from Canada, China, Mexico, India, and Colombia were the most successful in purchasing U.S. properties, primarily in suburban areas of Florida, Texas, California, Arizona, and Georgia.

Among these international buyers, 50% paid in cash, and 45% intended to use their properties for vacations, rentals, or both. In contrast, 28% of U.S. buyers paid in cash, and 16% had similar intentions for their purchases during the same period. Source:https://finance.yahoo.com/news/foreign-buyers-purchased-the-fewest-number-of-homes-in-14-years-study-finds-191501329.html