The U.S. luxury housing market ended 2025 with a contradiction: Prices continued to climb even as pending sales posted their sharpest decline in six months.
According to a report released Tuesday by Redfin, the median sale price for luxury homes rose 4.6% in 2025 to $1.31 million in December. This growth significantly outpaced the non-luxury segment, where prices increased just 1.4% to $375,000 — the slowest growth rate for that category since Redfin began tracking it in 2013.
Despite a 1.1% drop in pending sales year over year, prices at the top of the market remained buoyant due to scarcity of high-quality inventory. The report suggests that while overall demand is sluggish, affluent buyers are facing heavy competition for the few desirable homes available.
Alin Glogovicean, a Redfin Premier real estate agent based in Los Angeles, explained in the report that luxury home prices are rising not because demand is high, but because affluent buyers are competing for the few homes on the market that everyone wants.
He noted that high mortgage rates and elevated prices have made homebuyers exceptionally selective. “Even super wealthy buyers are hesitant to pull the trigger because there’s not a lot of great inventory and they don’t want to settle,” he said.
However, he added that desirable properties in prime locations are still sparking bidding wars and selling above asking price, often to cash buyers who waive contingencies.
Inventory data supports the narrative of a constrained market. Active listings of luxury homes grew 5.6% year over year in December, marking the slowest pace of supply growth since April. New listings saw a modest increase of 2.9% compared to the previous year.
With buyers unwilling to settle for less-than-perfect homes, properties are lingering on the market longer. The typical luxury home took 64 days to go under contract in December, five days longer than a year earlier and the slowest pace for the month since 2020.
Price appreciation was uneven across the country, with significant gains in the Midwest and Southeast. Milwaukee led the nation with a 20.6% year-over-year jump in luxury median sale prices, followed by Orlando, Fla., at 16.8% and Nashville, Tenn., at 13.6%.
Conversely, prices cooled in the Pacific Northwest and parts of Texas. Only two of the 50 most populous metro areas analyzed saw price declines: Fort Worth, Texas, where prices dipped 1.9%, and Portland, Ore., which saw a 0.7% decrease.
Redfin defines luxury homes as those estimated to be in the top 5% of their metro area’s market value. The report analyzed multiple listing service data from October through December.
