The Housing Market Continues to Struggle, Even in Luxury

It was supposed to be a rebound year for the home building sector but stubborn mortgage rates and tariff anxiety are continuing to hold it back. Luxury is no exception.

The U.S. housing market remains stuck as we approach the half-way point of 2025 with both new construction and resales down versus prior years and, more impactfully, off from the rosier forecasts many were making just a few months ago. Of course, blame it on the confusing tariff situation which has caused great anxiety throughout both the trade and with homeowners – but there’s also the matter of mortgage rates staying higher than projected even if they have come down slightly over the past few months. 

Now it seems the luxury housing market, which had been the one area that was holding up throughout the turmoil, is starting to feel the pain as well. Luxury home sales fell 10 percent in April versus 2024, the biggest decline since 2023, Redfin reports, and the lowest April level in more than ten years. This comes even as prices remain near record levels, with the median sale hitting $1.35 million, up nearly 7 percent versus a year ago. 

The difficult conditions seem especially prevalent in previously immune upscale areas, including those that relied on the tech industry to drive demand. Redfin says the steepest decline in sales came in San Francisco, which while dealing with broader economic issues, has been buoyed by the tech boom in nearby Silicon Valley. 

Quartz, the online news service which reported on the Redfin research, says if the upper slice of the marketplace is feeling unsure about conditions it could say a lot about the overall housing market. “If such workers are anxious, they’re right to be. So they’re not buying mansions or rushing to close – they’re wondering if the floor beneath them is as solid as it felt a year or two ago. It’s a quiet kind of panic: the pullback of those who still have money, but no longer feel safe. The result is weakening demand in what should be the most interest-rate-immune and resilient segment of the market.”

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