Luxury homes are flying off the market while starter homes are piling up

Enjoy the ride

I’m the first one to tell you that being an agent isn’t easy. Honing your craft as an agent and consistently executing at a high level requires a lot of effort, time, and perseverance. This business can be maddening at times.

That’s why I’ve learned it’s important to take time to appreciate what you love about this industry.

For me, I love that we can set our own hours. I love that we are our own bosses. I love that we help people. I love discovering the many new angles of our business. And, yes, I love that we can make a pretty penny doing what we do.

So, if you’re feeling stressed or overwhelmed as we enter the second half of the year, take some time this weekend to regroup and make sure you’re enjoying the ride. 

It may get bumpy at times, but it’s still one of the best gigs in the world.

- James

A tale of two markets

The U.S. housing market is splitting into two very different stories right now. While starter homes are piling up unsold, luxury properties are flying off the market. And, according to Zillow, the gap between the two is only getting wider.

Here are the key points to know:

• Starter homes are stacking up — Inventory is up 4.5% year-over-year as of June, but sales still fell 5.4% in May; buyers aren't showing up even as their options grow.

• Luxury is moving the opposite direction — Inventory dropped 5.2% year-over-year while sales climbed 6.2%, meaning fewer homes are chasing more demand.

• Price cuts tell the same story — 25% of starter listings saw a price cut in June, compared to just 20.6% of luxury listings.

• Prices are still rising at both ends — Starter-home values rose 2.3% year over year to about $202,000, while luxury homes climbed 3.1% to roughly $1.9 million.

• San Francisco shows the extreme version — Luxury sales there jumped 21.6% year-over-year while starter sales slipped 1.2%.

• The root cause is financial, not housing — Stock market gains are propping up high-end buyers, while inflation and a softer job market are squeezing the people who'd normally be buying their first home.

My take

The real story here isn't housing supply; it's purchasing power. Starter-home buyers have more inventory to choose from, more price cuts, and less competition than they've had in years, yet many still can't afford today's monthly payments. That tells you affordability isn't just about how many homes are available; it's about whether buyers have the income, savings, or financing to act. Meanwhile, wealthier buyers are benefiting from stronger balance sheets and are keeping the luxury market moving. Supply still matters, but this report is a reminder that building more homes alone won't solve affordability if households remain priced out of ownership.

US housing market draws less interest from foreign buyers

Between April 2025 and March 2026, international buyers purchased just 67,100 U.S. homes, the second-lowest annual total since 2009 and 14% below the previous 12-month period. That’s according to NAR’s latest report on foreign buyers.

Here are the key takeaways:

• Dollar volume fell even more than home count. Foreign buyers spent $45.3 billion, a 19.1% drop from $56 billion — outpacing the 14% decline in properties purchased.

• Cost and inventory outweighed a favorable exchange rate. Despite a weaker dollar giving foreign buyers more purchasing power, NAR says the pullback tracks the broader drop in international tourism to the U.S.

• Foreign buyers pay a premium and pay cash. The median purchase price was $465,000, and 48% paid all cash — nearly double the 28% cash rate among all U.S. homebuyers.

• Canada's on top, but China spends the most. Canada leads in volume (16% share, 10,700 homes), but Chinese buyers — concentrated in California — spent the most per home, averaging roughly $1 million and totaling $7.6 billion despite a smaller unit count.

• Florida and California are still the draw. Together they pulled in 39% of all foreign buyers, followed by Texas (12%), New Jersey (4%), and Georgia (4%).

• U.S.-based buyers now edge out those living abroad. Foreign buyers residing in the U.S. (recent immigrants or visa holders) made 56% of purchases ($21.8 billion), versus 44% from buyers living abroad ($23.5 billion).

• It's part of a longer slide. Foreign home purchases are down sharply from the 2017 peak of 284,500 homes and $153 billion.

My take

Foreign buying is down, but the buyers who remain are still spending. Nearly half paid cash, the median purchase price was $465,000, and Chinese buyers averaged roughly $1 million per home. These aren't buyers waiting for mortgage rates to fall or the dollar to weaken—they're purchasing because they have the means and a reason to be in the U.S. That's reinforced by the fact that most foreign buyers now already live here as recent immigrants or visa holders. For agents, the opportunity isn't chasing overseas bargain hunters; it's building relationships with high-value international clients who are already in your market.

The markets permitting the most single-family homes

Between June 2025 and June 2026, total housing permits issued in the U.S. fell 2.3% year-over-year, according to ResiClub. Single-family permits declined a more modest 0.2%, while multifamily permits for buildings of 5+ units dropped sharply, down 6.3%.

Houston and Dallas continue to dominate U.S. single-family homebuilding by sheer volume, while smaller Sun Belt metros — particularly in the Carolinas and Florida — are building at the fastest pace compared to their population.

Among the 250 largest markets by population, here are the top 10 by total single-family permits issued, and the top 10 by permits per 1,000 residents.

My take

The rankings reinforce something we've seen for years: builders are still concentrating new single-family construction in the Sun Belt. Texas leads by sheer scale, while many smaller metros in the Carolinas and Florida rank among the nation's leaders on a per-capita basis. That doesn't necessarily mean every one of these markets is red-hot today — some are working through elevated inventory — but it suggests builders are still placing their biggest bets on the South. Keep an eye on local permitting trends. They often provide an early signal of where inventory, competition, and business opportunities are headed next.

Schematics

The news that just missed the cut

• Landmaxxing, the latest trend in luxury real estate

• The biggest homebuying myths – according to The Mortgage Guy

• How you can win more listings by updating your pricing presentation

• Use this to build a team of AI-agents for your real estate business

• Texas’s next suburban growth wave is forming west of Fort Worth

Foundation Plans

Advice from James to win the day

What is the biggest difference between average agents and top producers? It’s not luck or talent, friends; it’s consistency. 

Success isn't built on one great day; it's built on showing up the next morning and doing it again. The habits you repeat every day will always matter more than the wins you celebrate once in a while.

Today, on Rise Above the Ranks, I sit down with Jeremy Davis, founder of Davis Sales Training, to discuss the habits, systems, and mindset that helped him sell 75 homes in his first year in real estate. 

In this episode, we dive into:

• Jeremy’s journey from teacher to top-performing agent

• The daily habits and systems behind his first-year success

• Why consistency beats talent

• How to overcome fear and build confidence

• The role of prospecting, door knocking, and role-playing

• Why every agent should think like a business owner

• Building systems that create long-term success

I think you’ll love this episode and get a lot out it.

Watch the full conversation here:

Breezy

Feature of the Week — Your AI Assistant, built for agents

Breezy is an AI assistant built specifically with agents in mind. Let Breezy handle follow-ups, insights, and client communication.

Instead of agents juggling spreadsheets, notes apps, CRM updates, and presentation tools, Breezy brings those workflows together.

Get Breezy here!

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“Your time is limited, so don’t waste it living someone else’s life.” — Steve Jobs

Each day is a gift – a chance to live the life you want. Ruthlessly focus on your goals. Don’t let your past or the fear of being judged distract or paralyze you. Choose to live with an integrity that you can be proud of.

Have a wonderful weekend, and I’ll see you back here next Friday!

- James