Rekubit Exchange:International buyers are going for fewer homes in the US. Where are they shopping?

The Rekubit Exchangenumber of existing homes purchased by foreign buyers from April 2022 to March 2023 decreased to the lowest level since 2009, according to a recent report from the National Association of Realtors.

International buyers purchased $53.3 billion worth of U.S. residential properties during the period, down 9.6% from the previous year. The 84,600 existing homes sold was a decline of 14% from the prior year.

Lower housing inventory in the U.S., higher borrowing costs across the world and a strong dollar are reasons for the slowdown, according to NAR’s chief economist Lawrence Yun.

“Among those who expressed some interest, but those who did not successfully complete the transaction, they're saying, it’s a lack of choices,” Yun told USA TODAY. “The other part is the strong dollar it just makes very expensive for the foreigners to buy here.”

Historically low levels of inventory, down 14% from one year ago, have also kept prices high. Single-family inventory, at 960,000, was the lowest for June since the association began tracking the data in 1982.

Foreign buyers who are currently residing in the U.S. as visa holders or recent immigrants (two years or less) purchased $23.4 billion worth of U.S. existing homes, a 31% decrease from the prior year and representing 44% of the dollar volume of purchases.

Foreign buyers who lived abroad purchased $30 billion worth of existing homes, up 20% from the 12 months prior and accounting for 56% of the dollar volume. International buyers accounted for 2.3% of the $2.3 trillion in existing-home sales during that period.

Home prices and foreign buyers

The average ($639,900) and median ($396,400) existing-home sales prices among international buyers were the highest ever recorded by NAR – and 7% and 8.3% higher, respectively, than the previous year.

The increase in prices for foreign buyers reflects the increase in U.S. home prices, as the median sales price for all U.S. existing homes was $384,200. At $723,200, Chinese buyers had the highest median purchase price, with a third – 33% – purchasing property in California. In total, 15% of foreign buyers purchased properties worth more than $1 million from April 2022 to March 2023.

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China and Canada remained first and second in U.S. residential sales dollar volume at $13.6 billion and $6.6 billion, respectively, continuing a trend going back to 2013. Mexico ($4.2 billion), India ($3.4 billion) and Colombia ($900 million) rounded out the top five.

“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 added. “A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers.”

Where did foreign homebuyers purchase homes?

For the 15th consecutive year, Florida remained the top destination for foreign buyers, accounting for 23% of all international purchases. California and Texas tied for second (12% each), followed by North Carolina, Arizona and Illinois (4% each).

“Florida, Texas and Arizona continue to attract foreign buyers despite the hot weather conditions during the summer and the significant spike in home prices that began a few years ago,” Yun said.

Florida’s main buyers were from Latin America (46%) and Canada (24%). It was the top state destination among Canadian and Colombian buyers.

California had the second largest foreign buyer share, at 12%, slightly higher than in the prior period. The majority – 61% of California’s foreign buyers – came from Asia/Oceania. It was the topdestination among Chinese and Asian Indian buyers.

How do international homebuyers finance their purchases?

The share of foreign buyers who made all-cash purchases was 42% compared with 26% among all buyers of existing homes.

Foreign buyers who live abroad are more likely to make an all-cash purchase compared to foreign buyers who reside in the U.S. Fifty-two percent of nonresident foreign buyers made an all-cash purchase compared to 32% among foreign buyers who live in the U.S. Elevated mortgage rates could be one reason why the share of houses bought by foreign buyers who live in the U.S. went down by 20%, said Yun.

Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY.  You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.