Forget Economy and Supply Bumps — Luxury Home Market Stays Strong

Despite rising construction costs, interest rates, and high prices at the pump and the grocery store, luxury homes continue to be a hot item across the United States.

Mordor Intelligence reported in August that sales of such homes in 2026 is predicted to grow about $7.5 billion year over year to just under $300 billion in total. More than that, the market is not expected to slow down for the foreseeable future, predicted to grow 3.2 percent annually to a total market size of just less than $350 billion by 2031.

The rosy outlook is not only about the fact consumers in the category generally have sufficient resources to override most economic considerations. Other factors driving the market include a shrinking inventory of luxury homes, which favor sellers and tend to drive up prices.

Counterintuitively, higher interest rates are actually spurring spending. Those with the ability to pay cash, of which as much as 46 percent of buyers over the past few years did, see buying now as a hedge against future volatility and interest fluctuations.

Of course, geography plays a big role in any statistical category, and luxury homes are no exception. The western United States leads the nation in luxury properties, while the southeast is the fastest growing, Mordor Intelligence states. The charge was led by Florida, offering a combination of favorable tax laws and year-round living. The Wall Street Journal/Realtor.com Housing Market Rankings also noted St. Louis, Detroit, Atlanta, Charlottesville, Virginia, and Nashville, Tennessee, as pocketed hotspots due to higher-end properties starting at lower entry price points.

Coldwell Banker offers additional insights via its Trend Report 2025, which breaks down the luxury home market even further. The median luxury home prices in 2024 grew 7.6 percent, more than twice the usual rate of 3 percent, the annual study stated. Entrepreneurs represented a third of luxury home buyers, followed by finance professionals at 21 percent and tech experts and doctors/lawyers at 15 percent each.

Interestingly, Coldwell Banker highlighted women and Gen X buyers as the new power players in the luxury market, what they called the “quiet elite.” Women with a net worth of $5 million or more own more than 15 percent of luxury real estate in the U.S. and are even a more powerful purchasing bloc when broken down by demographic. One study cited in the report estimated 54 percent of luxury properties owned in the under-35 age bracket were held by women.

Closer to home, the same factors driving runaway growth of northwest Arkansas overall is bringing with it its share of high-net-worth individuals of late, a fact not lost on real estate watchers.

“Since 2018, Arkansas has emerged as an unexpected destination for wealthy homebuyers, with million-dollar property sales soaring and luxury developments sprouting in previously overlooked corners of the Natural State,” wrote Cassandra Alvarez for Home Stratosphere. “This shift represents more than just rising home prices. It signals a fundamental change in how affluent Americans view Arkansas — no longer just flyover country but a deliberate destination.”

Arkansas buyers in the category, defined as people earning $500,000 or more, still make up a miniscule percentage of the overall, about 1 percent. However, Alvarez wrote, the growth in this segment shows the benefits of the state’s business-friendly climate — 32 percent of high earners relocated to Arkansas for professional reasons — as well as the tax climate brought about under Gov. Sarah Huckabee Sanders. Other than Texas and Tennessee, which have no state income tax, Arkansas had the second-lowest top bracket income tax among its border states in 2023 at 4.9 percent compared to 6.9 percent in 2015.

April Findlay, a 15-year veteran of residential real estate at The Charlotte John Co. in Little Rock, said the market for such homes in Arkansas has slowly but steadily come out of the bacchanal of COVID-19 — when interest rates were held artificially low and stimulus money was flowing — and the housing hangover of things returning to form. That normalization has forced real estate professionals to get more creative about how they market the homes in inventory.

April Findlay

“It is a matter of marketing differently,” she said. “As an agent, you’re probably going to pay a little bit more for better pictures and videos and do more social media. I think people were spoiled from the COVID days of everything selling in 24 hours. Today, there’s much more marketing behind it because [properties] will most likely stay on the market a little bit longer — not because it’s not a great house, not because it’s not priced right, just because of the price point.

“That means sometimes you have to be super creative and do something that you wouldn’t do for your regular open house. Maybe you’re doing more REALTOR® open houses, you know, a sip-and-see with champagne or something like that if it’s something you’re really trying to get agents in to preview.”

SEE THE FEATURE BELOW AND IN OUR SEPTEMBER 2026 ISSUE OF AY MAGAZINE