The Million Dollar Dream – Redfin Reports Nearly 10% Of U.S. Homes Now Worth $1 Million

A record number of homes are now valued at $1 million.

According to real estate brokerage Redfin, 8.5% of homes in the United States fall into the $1 million-and-up price bracket, marking an all-time high that exceeds the 7.6% recorded a year ago and more than doubling the pre-pandemic figure of 4%.

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Soaring home prices are the driving force behind the surge. The median national sales price rose by 4% year over year in June, pushing many homes past the million-dollar threshold. Even luxury properties, which were already expensive, witnessed a steeper price increase. Their median sale price reached $1.18 million in the second quarter, reflecting a 9% year-over-year jump.

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The rise in luxury home prices particularly strongly influences the overall million-dollar housing market. Many homes previously hovering near the million-dollar mark were finally pushed past it because of the significant price increase.

Mortgage rates have more than doubled since their pandemic lows in early 2022, significantly increasing monthly housing costs and cooling home sales. Normally, softer demand would lead to lower home prices, but a persistent housing shortage has kept prices elevated because of intense competition. While the number of homes for sale has recently improved, it's still significantly below pre-pandemic levels, as many homeowners are reluctant to give up their low mortgage rates.

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This market dynamic benefits homeowners and sellers, increasing the likelihood of their homes being valued at over $1 million. However, for prospective buyers, especially first-time homebuyers, the growing number of million-dollar listings makes homeownership increasingly out of reach.

"Home prices, insurance and mortgage rates have shot up so much that many people are either priced out of the market or weary of committing to such a high monthly payment," said Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, where the majority of homes go for at least $1 million. "The people who are buying without hesitating are in tech and work at Google, Apple, Facebook or a similar company. Many Bay Area buyers – especially those without tech money – are getting more selective, jumping ship if a small problem comes up in, say, the inspection. They're spending too much money to rationalize not getting everything on their must-have list."

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Recent declines in mortgage rates have provided a much-needed boost to homebuyers, increasing their purchasing power by tens of thousands of dollars. According to Zubiate, the downward trend has reignited interest in the Bay Area housing market.

California is home to the biggest share of million-dollar homes. While it is gaining them faster than anywhere else, there are more million-dollar homes nearly everywhere in the U.S. than a year ago.

There are exceptions. Once a hotbed of rapid price growth, Austin, Texas saw a slight decline in the percentage of million-dollar homes. Indianapolis and Houston experienced no change in the category.

Experts attribute the stability in Austin and Houston to a surge in new construction, which has helped increase housing supply and moderate price increases.

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