Foreigners are buying less real estate in the United States, and sluggish global economic growth is to blame.
Residential home purchases by people from outside the country plunged 36% to below $78 billion in the year that ended March 2019, according to a report from the National Association of Realtors.
Since 2017, the number of foreign buyers of US residential property has basically halved from $153 billion.
“Rising economic growth improves the spending capability of foreign buyers,” Lawrence Yun, chief economist, and Gay Cororaton, research economist at NAR, wrote in the report, which was released on Wednesday.
Looking more closely at the buyers, the country that was the biggest source of foreign cash was China — $13.4 billion, representing a 56% decline from the prior year.
“The dollar volume of purchases declined from all top five countries, with the steepest drop in Chinese purchases,” Yun and Cororaton wrote. Canada, India, the UK and Mexico rank behind China as top five buyer origins.
China, the world’s second largest economy behind the United States, is experiencing a steady slowdown in growth. In the second quarter of 2019, China’s economy grew at a 6.2% annual rate, its weakest performance in 27 years.
Buyers also might be holding back because of the strong US dollar, which makes homes more expensive for buyers whose income is in other currencies.
The dollar strengthened 5% against the Mexican peso in the year ended March 2019, for example, the report says.
More than half of foreign buyers, or 60%, are recent immigrants or visa holders, and nearly half are buying homes as their primary residence. The number No. 1 location by far is Florida, which accounts for 20% of the market share of foreign purchased homes. California, Texas, Arizona and New Jersey also make the top five.