Fewer US homes are worth $1 million

Rising mortgage rates cool demand in market

As mortgage rates continue their upward march, the share of U.S. homes worth seven figures is dropping.

In another indication of the cooling housing market, homes that would have been worth $1 million or more at the peak of the pandemic homebuying frenzy are now languishing at a lower price tier, according to a new analysis by Redfin.

In January, homes valued at $1 million or above fell to 7% compared to 8.6% last June at the peak of the market. However, they still make up a bigger share of the pie compared to January 2020, just before the pandemic, when a little over 4% of the homes were in the $1 million range.

Keep in mind, these numbers are not based on homes that are listed for sale, but rather what they are worth.

“In other words, this is what we think the home would sell for if the owner did decide to list it,” Angela Cherry, the director of communications at Redfin, told USA TODAY.

To calculate current values (January 2023), the Redfin Housing Value Index uses the Redfin Estimate, which is available in most but not all parts of the U.S.

To calculate historical values, it uses public records and MLS data on price-per-square-foot trends by ZIP code (or city, county or state when ZIP code data is insufficient). The Redfin Home Value Index includes both existing homes and new-construction homes, and dates back to the year 2000. Homes are not added to the index until they are first built or sold.

The share of homes worth at least $1 million was calculated using these raw numbers: 6,203,954 homes were worth at least $1 million in January 2023, compared with 7,458,031 in June 2022 and 6,030,177 in January 2022, Redfin told USA TODAY.

The total value of U.S. homes was $45.3 trillion at the end of 2022, down 5% ($2.3 trillion) from a record high of $47.7 trillion in June.

That’s the largest June-to-december drop in percentage terms since 2008, according to Redfin.

While the total value of U.S. homes was up 6.5% from a year earlier in December, that’s the smallest year-overyear increase during any month since August 2020.

Home values have dropped from record highs as 6.5%-plus mortgage rates dampen homebuying demand. That has pushed a certain portion of homes that would have been worth seven figures at the peak of the pandemic buying frenzy below the million-dollar threshold.

While home values are coming down from their peak and fewer sellers can command seven figures, that doesn’t mean buyers are getting a break, said Redfin economics research lead Chen Zhao.

“The typical homebuyer’s monthly mortgage payment is even higher than it was when home values peaked in the spring,” Chao said.