Media Relations

November 19, 2015

Sales of high-priced luxury homes slow with economic uncertainty

Though the market looks strong, areas of weakness suggest the fourth quarter may not be as encouraging as the previous nine months.

Sales of luxury homes over $2 million dropped 33 percent and the total dollars spent collapsed 52 percent from August to September according to the latest housing market report released from the W. P. Carey School of Business at Arizona State University.

“The decline we’re seeing at the top end of the market correlates with the economic uncertainty and shaken investor confidence we saw reflected in the stock market in the end of August and September,” said Michael Orr, director of the Center for Real Estate Theory and Practice and author of the report. “While at first glance the greater Phoenix housing market looks pretty strong, weaknesses in a few areas like these suggest the fourth quarter may not be as encouraging at the first nine months of 2015.”

Demand looks healthier with homes below $2 million, largely due to lenders’ appetite for jumbo loans to people with strong credit. However the supply of homes in this price range is up from last year and more than adequate down to $500,000, so there is little expectation of a general rise in prices.

A balanced, healthy market exists in homes priced between $300,000 and $500,000 with good supply and enough demand to keep it in check. Gradual small price increases are expected in this price range.

“The biggest problem we face is a huge mismatch between supply and demand below $300,000. This is likely to keep prices rising strongly and fastest for areas where the vast majority of homes are under the median sales price of $225,000,” says Orr.

Additional highlights from the September 2015 report:

  • Pricing for single-family homes remained stable and positive once again during September with the median sales price up 7.7 percent from one year ago to $225,000. Townhouse and condo properties saw a 10.2 percent increase in that same time frame up $140,000.
  • Sales volume was relatively robust for September. Single-family sales were 19 percent higher than in September 2014, a stronger comparison than for August. 
  • Single-family homes sales increased year over year in four sectors including normal re-sales (23%), new homes (22%), investor flips (38%) and HUD sales (54% - but from a very small base).
  • Single-family home sales decreased year-over-year across four sectors: bank-owned homes (31%), short sales and pre-foreclosures (17%), third-party purchases at trustee sale 3%) and GSE-owned homes (55%).
  • Active listing counts (excluding homes under contract) rose in September for the first time since January, adding 6 percent As of October 1, 2015 we had 15 percent fewer active listings than one year prior. Distressed supply was down 38 percent from a year earlier but 6 percent higher than last month.
  • Foreclosure starts on single family and condo homes rose 4 percent between August and September, but were down 17 percent from September 2014. Completed foreclosures on single family and condo homes were up 4 percent from the prior month but down 20 percent from a year earlier.

Additional information on demand, supply, pricing, foreclosure starts and completions, home sales, permits, purchasers and the rental market can be found on the complete report at The premium site includes statistics, charts, graphs and the ability to focus in on specific aspects of the market. For more about Orr’s work, see