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The number of homes purchased by international buyers has fallen to its lowest level in at least 14 years as foreign investors grapple with the same market headwinds as domestic buyers, according to new data from the National Association of REALTORS®.
High home prices and low inventory forced international buyers to purchase 14% fewer properties over the last year, shows NAR’s report, 2023 International Transactions in U.S. Residential Real Estate. Real estate pros say the reasons their international clients ultimately decided not to buy in the U.S. include property costs (30%), inability to find a suitable property (27%) and inability to obtain financing or qualify for a mortgage (20%).
“Sharply lower housing inventory in the U.S. and higher borrowing costs across the world have dented international buyers for two straight years,” says NAR Chief Economist Lawrence Yun. “However, recovering international travel following the end of the pandemic will bring more foreign transactions in the coming months and years.”
But international buyers who are still purchasing U.S. real estate are spending more than domestic buyers, often paying cash and targeting the priciest areas in the nation. The average purchase price for a foreign buyer rose to $639,900 over the past year, marking a 7% increase, NAR’s data shows.
The median purchase price for an international home buyer was $396,400, higher than the $384,200 for all properties sold. Forty-two percent of international buyers pay cash compared to about a quarter of the overall market. About half of international buyers purchased a property to use as a vacation home, rental or both compared to 16% among all existing-home buyers.
Who’s Buying and Where
International buyers are still drawn to U.S. real estate. After all, single-family home prices in the U.S. remain relatively affordable compared to the cost of a property in a central business district in other countries. Asian buyers made up the largest group of international buyers in the U.S. over the past year, with a market share of 38%. Latin American buyers followed, comprising 31% of the international buyer market share in the U.S., according to NAR’s report.
China continued to serve as the top country of origin among foreign buyers, and Chinese buyers have the highest median purchase price of $723,200. Chinese buyers largely targeted the U.S.’s priciest areas in California and New York. Canadian buyers were next in total expenditures, with individual purchases at a median of $572,900. Canadian buyers were most likely to purchase in vacation destinations like Florida and Arizona.
On the other hand, buyers from Mexico tended to purchase the least-expensive properties in the U.S.; Texas was their preferred destination.
“Home purchases from Chinese buyers increased after China relaxed the world’s strictest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” Yun says. “A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers.”
NAR’s report shows the following countries make up the top international buyers of U.S. real estate in 2023:
- China: 13% of foreign buyers, totaling $13.6 billion in purchases
- Mexico: 11%, $4.2 billion
- Canada: 10%, $6.6 billion
- India: 7%, $3.4 billion
- Colombia: 3%, $0.9 billion
Florida remained the overall top destination for international buyers, with most coming from Latin America and Canada. The top U.S. destinations for home sales from international buyers in 2023 are:
- Florida: 23%
- California: 12%
- Texas: 12%
- North Carolina: 4%
- Arizona: 4%
