Million-dollar home sales are running at a red-hot pace, and experts expect gains to continue, though at a tempered rate.
Sales of homes for $1 million or more jumped 31 percent to 8,900 units in October from a year earlier, following a 40 percent surge in September, according to the National Association of Realtors (NAR).
The stock market's rampant rally and rising consumer confidence are helping to drive sales,
NAR spokesman Walter Molony tells Fortune.
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The Standard & Poor's 500 Index has generated a total return of 27.9 percent so far this year.
Slightly higher interest rates and a more subdued stock market will likely push $1 million-home sales growth down to 10 to 15 percent next year, NAR chief economist Lawrence Yun tells the magazine.
"I'm not so concerned about a negative impact on the $1 million market unless there's a substantial [stock market] correction," he notes.
Molony says some investors have purchased $1 million homes to add diversification to their stock portfolios. "The growth in the equity markets has really helped the sale of $1 million-plus properties, as a lot of those have been made with cash purchases," he explains.
But not all news is good on the luxury-home front. Luxury homebuilder Toll Brothers last week
reported a 10 percent drop in sales contracts for recent weeks. Home seekers were reacting to higher prices, analysts and the company say, according to
The Wall Street Journal.
Toll has boosted its average selling price 21 percent to $703,000 over the last year.
"Toll's buyers have more discretionary income, but even they have decided that the pricing pace has been too aggressive," Vicki Bryan, senior analyst at Gimme Credit, tells The Journal. "This sets the tone for the next two quarters in terms of pricing."
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