Where do international buyers purchase homes in the USA?

The number of existing homes purchased by foreign buyers from April 2022 to March 2023 has dropped to its lowest level since 2009, according to a recent report by the National Association of Realtors. During this period, foreign buyers acquired real estate in the U.S. worth $53.3 billion, which is 9.6% less than the previous year. A total of 84,600 existing homes were sold, marking a 14% decrease compared to the previous year.

The decline in the number of transactions is linked to a lack of listings in the U.S. real estate market, rising loan costs worldwide, and the strengthening of the dollar, said Lawrence Yun, chief economist of the National Association of Realtors. "Those who showed interest but were unable to successfully close a deal say the reason is the lack of options," Yun told USA TODAY reporters. He also noted that "the high cost of the dollar makes real estate purchases here very expensive for foreigners."

Historically low levels of supply in the market, which have decreased by 14% compared to the previous year, also support high housing prices. The number of single-family homes available, totaling 960,000 units, is the lowest for June since data tracking began in 1982.

Foreign buyers residing in the U.S. on a visa or who are recent immigrants (within the last two years) purchased existing homes in the U.S. for $23.4 billion, which is a 31% decrease from the previous year and accounts for 44% of the total purchase volume. Foreign buyers living abroad purchased existing homes for $30 billion, which is a 20% increase compared to the previous 12 months and represents 56% of the total transaction volume. Foreign buyers make up 2.3% of the total sales of existing homes during that period.

The average sale price of existing homes purchased by foreign buyers ($639,900) and the median price ($396,400) were the highest ever recorded by the National Association of Realtors, and were up 7% and 8.3%, respectively, from the previous year. The increase in prices for foreign buyers reflects the rising cost of housing in the U.S., as the median sale price of all existing homes in the U.S. was $384,200. Among foreign buyers, Chinese buyers had the highest property value with a median purchase price of $723,200, with one-third (33%) buying property in California. A total of 15% of foreign buyers purchased properties worth over $1 million from April 2022 to March 2023.

China and Canada remain first and second in terms of real estate sales in the U.S.

“Real estate purchases by Chinese buyers increased after China eased the world's strictest pandemic control policies, while buyers from India contributed to the country's GDP growth,” Yun added. “The strengthening of the Mexican peso against the US dollar likely contributed to increased sales from Mexican buyers.”

Florida has once again become the top destination for foreign buyers for the 15th consecutive time, accounting for 23% of all international purchases. California and Texas share the second spot (each with 12%), followed by North Carolina, Arizona, and Illinois (each with 4%). "Florida, Texas, and Arizona continue to attract foreign buyers despite the summer heat and the significant rise in housing prices that began a few years ago," said Yun. The main buyers in Florida are residents of Latin America (46%) and Canada (24%). It is also the primary state for Canadian and Colombian buyers.

California has the second largest share of foreign buyers at 12%, which is slightly higher than in the previous period. The majority—61%—of foreign buyers in California come from Asia/Oceania. California is a primary destination for Chinese and Indian buyers.

How do foreign buyers finance their purchases? The share of foreign buyers who made all-cash purchases is 42%, compared to 26% among all existing home buyers. Foreign buyers living abroad are more likely to make cash purchases compared to foreign buyers residing in the U.S. 52% of non-resident foreigners made their purchase in cash, while the figure for foreign buyers living in the U.S. is 32%. Rising mortgage interest rates may be one reason for the 20% decrease in home purchases by foreign buyers living in the U.S., according to Yun.

Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY. You can follow her news on Twitter @SwapnaVenugopal and subscribe to our daily money newsletter here.