At the zenith of the COVID-19 pandemic, in July 2021, U.S. home price growth reached a staggering peak of 19.3% annual appreciation, according to data from the Federal Reserve Bank of Dallas.
The gains were broad-based, from starter homes to megamansions, but the luxury tier was particularly pepped up by ultralow interest rates created by the Fed’s emergency easing measures, with years’ worth of typical price growth compressed into a two-year span.
Five years later, a Realtor.com report examines the inevitable market correction that followed the pandemic-era frenzy, noting that May’s 1.4% year-over-year dip in luxury home prices marks the 26th consecutive month of annual declines.
Realtor.com defines luxury as homes within the top 10% of all listings, including single-family homes, townhomes and condos. Entry-level luxury falls between the 90th and 95th percentiles and high-end luxury between the 95th and 99th percentiles, with ultraluxury meaning the top 1% of listings.
While that first luxury tier, which had a nationwide price threshold of $1,283,432 in May, accounted for the 1.4% yearly slump, high-end luxury homes (above a $2,000,466 threshold) saw prices fall 5.5% last month and ultraluxury properties ($5,566,377 and above) clocked a 4.4% year-over-year decline.
Anthony Smith, a senior economist at Realtor.com, observed in a press release accompanying the report that the luxury market correction has been unevenly spread geographically.
“Two markets have surpassed their pandemic peaks entirely. Five have fallen below where they started before COVID arrived,” Smith noted. “The ones still holding their gains have something the others don’t: real reasons for buyers to be there that have nothing to do with low mortgage rates and remote work.”
The two market leaders referenced by Smith are Minneapolis-St. Paul and Boise, Idaho.
The Twin Cities area saw typical luxury home prices increase from $850,000 in February 2020 to a comparatively modest $999,000 at their pandemic-era peak. In May, they reached $1.1 million, per Realtor.com data.
Boise experienced a pandemic-era spike in luxury home prices of more than 87%, from $699,000 to $1.31 million. Luxury prices in the Idaho capital stood at $1.45 million in May.
At the opposite extreme, typical luxury prices in the San Francisco Bay Area have fallen from a COVID-era peak of $3.68 million to $2.69 million in May.
Realtor.com attributes the San Francisco market downturn to headcount reductions among tech firms causing outmigration and a contraction of the luxury buyer pool. But the listings platform also cites “AI equity liquidity events” — including employee tender offers and secondary market transactions from major tech companies — that have kept downpayments in the luxury home market elevated compared to pre-pandemic norms.
“That concentration of cash buying, drawn from a relatively small but highly compensated AI workforce, introduces a counterforce to the headline price correction,” the report stated.
At the national level, despite more than two years of consistent year-over-year price declines in the luxury home market, entry-level luxury prices rose 0.7% from April, and the rate of annual declines across all luxury tiers has slackened in recent months.
“The pace of annual softening has pulled back considerably from the 5%-plus drops seen in early 2025, suggesting the national luxury floor may be taking shape,” Realtor.com concluded.
