Navigating the housing market may become increasingly challenging for prospective buyers hoping to find reasonably priced homes, as a recent report from Redfin highlights a significant shift in the market dynamics. The report reveals that nearly 1 in 10 homes across the United States, equating to approximately 8.5%, are now valued at or above $1 million. This marks the highest proportion ever recorded, reflecting a substantial rise of 7.6% from the previous year and more than doubling the 4% figure seen prior to the pandemic.
This dramatic increase in the share of million-dollar homes can be attributed to a combination of factors, primarily driven by historically high home prices. Despite high mortgage rates slowing overall demand, the limited inventory of available homes has fueled heightened competition among buyers. The scarcity of properties has kept prices elevated, contributing to the growing number of homes reaching the million-dollar threshold.
In June, Redfin reported that median home sale prices reached a record high of $442,525, marking a 4% increase from the previous year. This surge in home prices came alongside the highest share of price cuts—20%—as buyers grew increasingly cautious. Many prospective buyers pulled back from making purchases, leading to an uptick in canceled transactions. The luxury home segment, in particular, has seen an even sharper increase in prices, rising more than twice as fast as non-luxury homes. The average price for a luxury home in the U.S. soared to a record $1.18 million in the second quarter, further pushing the number of homes valued at or near $1 million.
The rising prevalence of million-dollar homes presents both opportunities and challenges in the housing market. For sellers, the likelihood of having a higher-priced asset has increased. However, buyers face growing obstacles as more properties fall into the high-price bracket. Many buyers are either priced out of the market or hesitant to commit to the increasingly steep prices.
The rise in million-dollar homes varies significantly across different regions. Redfin’s analysis shows that all but three of the 50 most populous metropolitan areas in the U.S. experienced an increase in the share of homes valued at $1 million or more. The exceptions were Austin, which saw a slight decrease from 10.1% to 10%, and Houston and Indianapolis, where the percentages remained stable at 3.6% and 2%, respectively.
California continues to dominate the million-dollar home market, with more than 80% of homes in San Francisco and San Jose falling into this category. Anaheim follows closely, with nearly 60% of homes valued at $1 million or more. The state has also witnessed the most rapid growth in the proportion of high-value homes. Anaheim’s share of million-dollar homes surged by 7.8% since last June, while San Diego, Los Angeles, and San Francisco saw increases of 6.1%, 4.3%, and 4.2%, respectively. Seattle also experienced a 4.2% increase in its share of million-dollar homes.
For buyers seeking more affordable housing options, Redfin suggests exploring cities like Cleveland, Ohio; Detroit, Michigan; Kansas City, Missouri; and Pittsburgh, Pennsylvania. In these areas, fewer than 1% of homes are valued at $1 million, offering a more budget-friendly alternative to the soaring prices found in major metropolitan regions. As the housing market continues to evolve, understanding these trends can help prospective buyers make informed decisions and navigate the challenges of finding a home that fits their budget.