Luxury home values, which consistently lagged the middle of the market over the past several years, have now outpaced typical homes for five consecutive months. 

For this analysis, Zillow defines a luxury home as being in the most-valuable 5% of homes in a given region. Home values for luxury homes tend to grow more slowly, in part because the pool of buyers is so small. 

Luxury home values across the U.S. are 3.9% higher than a year ago. That’s faster than the 3.2% annual growth for the typical U.S. home. In every month from January 2019 — the earliest year-over-year change in Zillow’s records — through January 2024, typical home values were outpacing luxury homes on an annual basis. In every month since, luxury home values have been growing faster. 

One possible explanation is that luxury home buyers are less affected by higher mortgage rates than a typical home buyer, especially repeat buyers who saw the equity in their current home soar over the past few years. Many will have the option to pay with all cash and skip a mortgage payment altogether.

Luxury home inventory has been slower to recover than inventory overall, helping keep prices climbing.  Inventory in the luxury segment is up 15.7% year over year and is 46.9% below pre-pandemic norms. By comparison, total inventory is 22.7% higher than last year and about 32.6% below pre-pandemic averages.

The share of luxury listings with a price cut is climbing, but is tracking below the market as a whole. In June, 20.8% of luxury listings experienced a price cut, up from 19.4% the previous June. Among all homes, 24.5% of listings had a price cut. 

The hottest and coolest luxury housing markets

The typical luxury home nationwide is worth about $1,620,000. Among the 50 largest U.S. metro areas, the typical luxury home ranges from a low of just under $750,000 in Buffalo to more than $5.3 million in San Jose. 

The luxury home market in Richmond is red hot. Luxury home values in Richmond are 16.5% higher than last year, far surpassing the growth seen in any other major market — Hartford luxury homes had the next strongest growth, up 8.6% over the same period. Luxury home inventory in Richmond is down 13.2% year over year, making it one of only six major markets with fewer luxury homes for sale than last year. Luxury homes in Richmond that sold in June did so after just six days on the market, fastest in the country. 

Austin is the only major market where luxury home values declined over the past year, down 1.5%. Home values in Austin overall saw a meteoric rise during the pandemic, and a building boom in response to that demand has helped lessen competition for each home and bring price growth under control. Luxury homes in Austin that went pending did so in over two months (68 days), second only to luxury homes in Miami that took 83 days to go pending.