U.S. luxury housing is lagging behind the mainstream market, which posted tight inventory and strong price growth in 2017, according to year-end data from Realtor.com.
The average sales price for the luxury market—defined as the top 5% of sales—grew 5.14% from January to December to nearly $804,000. By contrast, tight inventory and a lack of affordable housing pushed the average price in the overall market up 6.9% to $234,851.
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"We’re seeing the luxury market slow down compared to the overall market," said Javier Vivas, director of economic research at Realtor.
The divergence comes down to supply, where a lopsided proportion of new construction is taking place at the high-end, Mr. Vivas said. That has led to a wealth of luxury homes—and in cities like New York and Miami even an oversupply at the very top of the market.
Miami-Dade County offered the most striking divergence between luxury and mainstream, according to Mansion Global’s analysis of the Realtor data. The average luxury price there fell 6.37% this year, while the market as a whole saw prices soar more than 9%.
Some very affluent suburbs across the country also saw luxury prices decline and listings languish on the market for months in 2017.
Several California counties around San Jose and San Francisco, including Napa, Monterey and Santa Cruz, saw luxury prices decline. Meanwhile, bidding wars over scarce inventory for affordable housing pushed sale prices higher in the overall market. In Napa County, luxury prices fell nearly 6% in 2017, while the market as a whole saw prices increase 9.7%.
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Likewise, in a swath of southern Connecticut, including Bridgeport, Stamford and Norwalk, luxury prices fell more than 8% to an average $1.497 million due to lifestyle trends that have seen the wealthy flock to urban centers at the expense of neighboring suburbs.
A few metro areas have bucked the trend, however, with luxury housing outpacing the rest of the market.
Brooklyn luxury logged a 30% increase in prices this year to an average of $2.469 million. The overall market in the New York City borough grew half as fast, with prices rising more than 16%, according to Realtor’s data.
The high-end markets in Queens, New York, and Seattle also heated up over the past year. Average luxury price rose nearly 11% in the New York City borough, while Seattle saw a 14% increase.