US homes find fewer foreign buyers as rising costs and a strong dollar leave market in record slump

LOS ANGELES (AP) — Sales of U.S. homes to Chinese, Canadian and other foreign buyers have fallen to the lowest level in more than a decade, hampered by a strong dollar and more hurdles that have kept the housing market in a deep sales slump for over two years.

Some 54,300 previously occupied U.S. homes were purchased by non-U.S. citizens in the 12 months ended in March, according to a report this week by the National Association of Realtors.

That’s the fewest homes sold to foreign nationals in data going back to 2009. Sales were down about 36% compared to the same period a year earlier.

Those transactions from April 2023 through March of this year totaled $42 billion, a 21.2% decline from the prior-year period, NAR said.

“International buyers face the same difficult market challenges as domestic buyers — lack of inventory, higher mortgage rates, the affordability condition,” said Lawrence Yun, NAR’s chief economist. “On top of that, for many international buyers the stronger dollar was not in their favor.”

The U.S. housing market has been stuck in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Existing home sales sank to a nearly 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to mortgage buyer Freddie Mac.

The average rate has mostly hovered around 7%, limiting home shoppers’ purchasing power. At the same time, the supply of homes for sale, though rising in recent months, remains close to historic lows. That’s kept the market competitive enough to lift home prices to new highs.

On top of those affordability challenges, foreign buyers have to factor in the potential for additional costs when the U.S. dollar is stronger than their currency. The U.S. Dollar Index, which tracks the value of the greenback relative to a basket of foreign currencies, has risen 3.9% over the past 12 months.

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

All-cash sales accounted for half the international buyer transactions, compared to just 28% of all existing-home buyers, NAR said.

The report defined international buyers as non-U.S. citizens with permanent residences outside the country and immigrants who had been in the U.S. less than two years when they bought a home. It also included purchases by non-immigrants living in the U.S. for more than six months under professional or educational visas, among others.

The number of existing U.S. homes purchased by international buyers peaked in the 12 months ended March 2017 at 284,500 properties, according to NAR. That was fueled in part by a surge in Chinese nationals snapping up homes.

Among the foreign nationals who bought a U.S. home in the 12 months ended in March of this year, buyers from China accounted for 11% of purchases, matching Mexico, NAR said. Home shoppers from Canada topped the list with 13%.

Where did most of the international home shoppers end up buying a home? Florida drew the most at 20% of all sales to foreign buyers, followed by Texas (13%), California (11%) and Arizona (5%). Georgia, New Jersey, New York and North Carolina each accounted for 4%, NAR said.