One surprising thing that’s working in buyers’ favor in today’s housing market

Buyers are contending with soaring home values, dwindling affordability and competition from real estate investors. But one factor of the housing market today is working in favor of the beleaguered American homebuyer: You’re no longer competing for precious inventory with foreign buyers — or at least not to the same level as you once were.

International homebuyer activity on the decline

Activity from international buyers has plunged, the National Association of Realtors (NAR) reported Wednesday. NAR’s new International Transactions in U.S. Residential Real Estate report shows just 54,300 purchases of existing homes by foreign nationals during the period between April 2023 and March 2024. That’s quite a bit off from 84,600 the previous year and way below the pre-pandemic peak of 284,500 sales, in the year ending March 2017. In fact, it’s the lowest level since NAR began recording purchases by foreign buyers in 2009.

In terms of dollar volume, foreigners spent $42 billion on U.S. residences in the latest year, off from $53 billion the previous year and far off the 2017 peak of $153 billion.

“The strong U.S. dollar makes international travel cheaper for Americans but makes U.S. homes much more expensive for foreigners,” NAR Chief Economist Lawrence Yun said in a statement. “Therefore, it’s not surprising to see a pullback in U.S. home sales from foreign buyers.”

Top destinations for international homebuyers

International buyers focused on just a handful of states: Florida accounted for 20 percent of all international transactions, followed by Texas (13 percent), California (11 percent), Arizona (5 percent) and Georgia (4 percent). This marked the 16th year in a row that Florida topped the list. New York, New Jersey, North Carolina and Illinois also are common destinations.

More than half of international buyers landed in just five states. In other words, foreign buyers are a factor in only a handful of markets. If you’re shopping for a home in, say, Indiana or Iowa or Kansas, the decline in foreign transactions won’t help you much. But if you’re looking in Florida or California, it’s a small but welcome respite.

While the fading of foreign buyers is not a great trend for condo developers in Miami, the shift could help U.S. homebuyers. They’ve already been buffeted by a lack of supply, and by competition from investors snapping up both existing homes and new homes.

In fact, there’s some evidence foreign buyers are being priced out of the market: The average price ($780,300) and median price ($475,000) paid by international homebuyers were both the highest ever recorded by NAR – up 21.9 percent and 19.8 percent, respectively, from last year.

Altogether, 18 percent of international buyers purchased properties worth more than $1 million, NAR said.

What countries do international buyers come from?

Canada was the top country of origin, with a 13 percent share of foreign buyer purchases of U.S. existing homes, followed by China and Mexico at 11 percent each and India at 10 percent.

In terms of dollar volume, though, China took the top prize with $7.5 billion in home sales. Canada was next at $5.9 billion, and India ($4.1 billion), Mexico ($2.8 billion) and Colombia ($0.7 billion) completed the top five.