Guess Who’s Buying Fewer Homes? Inside the Housing Market’s Latest Record-Setting Low

High home prices, rising mortgage rates, and a consistent lack of fresh listings may have kept 14,000 foreign buyers from purchasing U.S. real estate.

Over the past year, international buyers snapped up 7.9% fewer residential properties than they did during the same period a year ago, according to a recent report from the National Association of Realtors®. And while buyers from outside the U.S. did buy 84,600 existing homes, that figure is the lowest it’s been since NAR began tracking this data in 2009.

Foreign buyers made up about 1.8% of all home sales from April 2022 through March 2023, the time period covered by the report.

“With lower home sales nationwide, we also saw a corresponding decrease in foreign purchases,” says Matt Christopherson, NAR senior research survey analyst.

The report is based on an NAR survey of nearly 7,500 Realtors who worked with noncitizens with permanent residences outside of the U.S., recent immigrants who have lived in the U.S. less than two years at the time of the real estate transaction, or non-immigrant visa holders who’ve lived in the U.S. for professional, educational, or other reasons.

One big caveat is that only existing-home sales were included in the report—newly built homes and condos were not counted.

Yet in an all-too-predictable twist given today’s overheated real estate market, foreign buyers paid more for less real estate. They spent 8.5% more than a year ago due to the current wallet-crushing home prices to drop $53.3 billion overall on U.S. homes.

While that sounds impressive, it accounts for just a small portion of the $2.3 trillion total existing-home sales pie.

And although foreign buyers account for a massive infusion of cash into the U.S. housing market, it’s a steep fall from 2017. That year, foreign buyers spent a record $153 billion on U.S. residential real estate.

A fall of $100 billion in six years raises the simple question: What happened?

Why foreign homebuyers are staying home

In recent years it was easy to understand why foreign buyers were staying put: COVID-19 travel restrictions. Yet despite the pandemic largely fading away, its aftereffects continue to ripple through the housing market.

“While nearly all COVID-related travel restrictions have been lifted, the global economy remains in recovery following the pandemic, which has slowed the return of foreign buyers to the U.S.,” says Christopherson. “Additionally, while foreign travel to the U.S. has largely recovered, foreign tourism is still below pre-pandemic levels.”

And as home prices have soared, foreign buyers might also be facing the same affordability challenges as U.S. homebuyers. The median list price for a home in June was $445,000, barely lower than 2022’s all-time high of $450,000.

In fact, foreign buyers who did make offers on U.S. soil spent more than ever before, coughing up a median of $396,400, the highest ever recorded by the NAR. Last year’s median was $366,100.

And rather than keeping their U.S. home as a primary residence, half of foreign homebuyers used them as a vacation home, rental, or both.

Which states are most popular for international buyers?

The foreign buyers of U.S. homes continue to favor Florida. The Sunshine State’s main home shoppers were from Latin America, 46%, and Canada, 24%.

“Florida remains the poster child of foreign buyers in the U.S., accounting for 23% of foreign purchases,” says Christopherson, who notes the state was the top destination for Canadian and Colombian buyers.

California claimed second place, with 12% of foreign purchases. The Golden State was the top destination for Chinese and Indian buyers.

Two years earlier, international buyers made up 16% of the state’s existing-home sales.

“We have observed a significant decline in foreign buyers in the California real estate market post-pandemic,” says Cara Ameer, an agent with Coldwell Banker who is licensed in California and Florida. “It has been a largely nonexistent buyer audience.”

Texas took the No. 3 spot, with 12% of international buyers. It was popular with Mexican buyers due to its proximity to Mexico and lower home prices than other parts of the country.

The top three areas were followed by North Carolina, 4% share, with nearly half of these buyers hailing from Asia/Oceania.

Arizona and Illinois also nabbed 4% of foreign buyers. And while Canadians favored Arizona, the Granite State drew the Asia/Oceania crowd. New York, Ohio, Pennsylvania, and New Jersey rounded out the other top spots of the total foreign buyers.

Which foreign buyers are spending the most?

Chinese buyers dropped the most cash on U.S. properties, spending $13.6 billion in total. They were followed by Canadians, who collectively paid $6.6 billion. Buyers from Mexico followed at $4.2 billion. Then came Indian buyers, at $3.4 billion, and Colombians, at $0.9 billion.

Almost half of the overseas buyers bought homes in quiet suburban areas, with the majority, 76%, purchasing detached single-family homes and townhomes.

But what international buyers do in the next 12 months is anyone’s guess as home prices remain stubbornly high, mortgage rates push 7%, and inflation remains uncertain.

“It just became more complicated and involved to purchase property in the United States as a foreign buyer,” says Ameer. “I would attribute the decline in foreign buyers due to post-COVID recovery, political tensions along with high home prices, higher interest rates, currency exchange rates, and the general climate of an economic slowdown.”

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