Foreign buyers are giving up on the American housing market.

key points

International buyers bought 14 percent fewer homes in the U.S. last year, the least since the National Association of Realtors began tracking the figure in 2009.

But the median price of homes they purchased was $396,400, the highest realtors have ever recorded.

International buyers are retreating from the US housing market, as high mortgage interest rates, rising home prices, a tight supply of homes for sale and a strong dollar all make purchases much less economically attractive. 

From April last year to this March, international buyers bought about 84,600 houses; That's the lowest number since the National Association of Realtors began tracking such purchases in 2009 and down 14 percent from the previous year.

And while overseas buyers bought fewer homes, they paid more for them. The median price of homes they purchased was $396,400, the highest the realtors have ever recorded.

China, Mexico, Canada, India and Colombia were the top five origin countries for international buyers of existing homes by number of homes, not dollar volume. The survey does not count new construction, where international buyers are also active.

Chinese buyers had the highest average purchase price, $1.23 million, likely because a third of them bought in California, where home prices are the highest. Overall, 15% of foreign buyers purchased homes worth more than $XNUMX million.

"Home purchases by Chinese buyers increased after China eased the most stringent lockdown policies of the pandemic, while buyers from India were helped by the country's strong GDP growth," Lawrence Yun, NAR's chief economist, said in a press release. "A stronger Mexican peso against the US dollar likely contributed to an increase in sales by Mexican buyers."

While overseas sales were down overall, Chinese purchases did generate substantial gains. The total of 2023 home purchases by Chinese is the highest since 2018, which was one of the record years for international property purchases by Chinese, according to Juwai IQI, an international real estate technology group based in Asia.

"Only one in 10 Chinese buyers is buying purely as an investment, which is a big change from the mid-2010s, when wealthy Chinese consumers tried to diversify their wealth outside of China," said Kashif Ansari, Juwai IQI co-founder and group CEO. "In 2023, the typical Chinese buyer is no longer an offshore investor but on the way to becoming an American resident and citizen."

Foreign buyers continue to flock to the same places as before, namely Florida (23%), California (12%), Texas (12%), North Carolina (4%), Arizona (4%) and Illinois (4%). Chinese buyers in particular love California, as they often buy so their children can attend local schools and universities.

"Florida, Texas and Arizona continue to attract foreign buyers despite the hot weather conditions during the summer and the significant increase in home prices that began a few years ago," Yoon added.

About 42% of foreign buyers used cash. As for what they are buying, half of them purchased the properties for use as a vacation home, a rental property, or both, compared to 44% the previous year.

The decrease in the number of purchases abroad is not expected to ease the competition for local buyers, since international buyers only made up a little more than 2% of all buyers. But it could help margins in certain domestic markets most favored by foreign buyers.

Today's local buyers, however, are more concerned about mortgage rates, which are more than double what they were in the first two years of the pandemic, and the low supply of homes for sale