Sales of Over-$5-Million Homes Soar Across the U.S.

Luxury sales and home prices across the U.S. rose significantly during the third quarter, as the inventory shortage that has tightened the general market has finally caught up with the high-end segment, according to a Redfin report released Thursday.

Luxury homes, which the Seattle-based national brokerage defines as the top 5% sales in each of the 1,000 cities it tracks, sold at an average of $1.71 million in the third quarter, rising 4.9% from the same period last year.

The price gain is largely due to a supply shortage, which has been nagging the country’s overall housing market for quite a while. The number of homes for sale priced at $1 million and higher fell 18.1% year-over-year to 92,905, while listing inventory of $5-million-and-above homes shrank 19% to 8,408, resulting in overall luxury inventory decline for the first time since 2014 when Redfin began tracking the luxury market.

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Despite a tightening supply, "there is still strong buyer demand for high-end homes," Nela Richardson, chief economist at Redfin, said in the report.

Sales of homes priced at $1 million and above increased 11% annually to 31,064, while the number of $5-million-and-plus sales rose to 616, a 10.2% increase from a year ago, according to Redfin.

Luxury homes were also selling faster during the last quarter, with a typical home finding a buyer in 70 days, four days quicker than the same period last year.