Higher borrowing costs across the world took a toll on annual foreign investment in U.S. existing homes last year. Foreign buyers purchased $53.3 billion worth of U.S. existing homes from April 2022 through March 2023, down 9.6% from the previous year, according to a new report from the National Association of Realtors.
Foreign buyers closed on 84,600 properties, down 14.2% from the prior year. It was the lowest number of homes bought since 2009, when NAR began tracking this data.
Overall, U.S. existing-home sales totaled 5.03 million in 2022, down 17.8% from 2021.
NAR’s 2023 International Transactions in U.S. Residential Real Estate report surveyed members about transactions with international clients who purchased and sold U.S. residential property from April 2022 through March 2023.
“Sharply lower housing inventory in the U.S. and higher borrowing costs across the world have dented international buyers for two straight years,” said NAR chief economist Lawrence Yun. “However, recovering international travel following the end of the pandemic will bring more foreign transactions in coming months and years.”
Meanwhile, the foreign buyer median purchase price leaped to $396,400 for an existing home, the highest price ever recorded by NAR. The average price was $639,000, increasing 8.3% compared to the previous year.
Top foreign buyers
China and Canada remained first and second in U.S. residential sales dollar volume at $13.6 billion and $6.6 billion, respectively, a trend that goes back to 2013. Mexico ($4.2 billion), India ($3.4 billion) and Colombia ($0.9 billion) rounded out the top five.
In total, 15% percent of foreign buyers purchased properties worth more than $1 million from April 2022 to March 2023.
Florida remained the top destination for foreign buyers for the 15th consecutive year, accounting for 23% of all international purchases. California and Texas tied for second (12% each), followed by North Carolina, Arizona and Illinois (4% each).
All-cash sales accounted for 42% of international buyer transactions compared to 26% of all existing-home buyers. Meanwhile, non-resident foreign buyers (52%) were more likely to make an all-cash purchase than resident foreign buyers (32%).
For a breakdown by nationality, two-thirds of Colombian buyers (67%) made all-cash purchases, the highest share among the top five foreign buyer nations. Approximately half of Canadian (51%) and Chinese (47%) buyers made all-cash purchases. Indian buyers were the least likely to pay all cash, at just 15%.
Half of foreign buyers purchased their property for use as a vacation home, rental property, or both – up from 44% the previous year. Also, 76% of international buyers purchased detached, single-family homes.