Inventory RETURNS
As the supply of homes increases, sellers need to ensure that their properties are properly priced and marketed.
Housing provision in the U.S. is starting to climb again, according to data released in September 2025 by the U.S. Census Bureau, which found there were 124,000 new homes waiting for homebuyers—the highest number in 16 years according to an October 2025 report by Scripps News.1
Housing stock had been low for several years previously, partly due to a real estate buying spree prompted by the COVID-19 pandemic and historically low interest rates. For example, more than 2.1 million more people became homeowners in 2020, according to a March 2021 report by Pew Research Center.2 The current rise in housing stock means that in many areas, homebuyers now have more options, and that includes the luxury sector of the market.
However, not every region of the globe has seen an increase in supply. Inventory remains tight in the capital cities of Europe, where purchases by institutional investors have tripled over the past decade, says a July 2025 report in the Guardian,3 as well as in the Northeast and Midwest regions of the U.S., according to August 2025 data released by Realtor.com®.4 But new opportunities are coming online elsewhere, as branded residences are being built at speed in Spain, Portugal and beyond.
“We’re seeing interesting regional patterns emerge, and it’s important to remember that luxury real estate often moves independently of broader market trends,” says Tammy Fahmi, senior vice president, global servicing and strategy, Sotheby’s International Realty. “Some luxury property markets are experiencing increased inventory as homebuyers explore new destinations, while others are seeing tighter supply. Additionally, areas with the greatest lifestyle advantages continue to attract investment interest.”
“ IT’S IMPORTANT TO REMEMBER THAT LUXURY REAL ESTATE OFTEN MOVES INDEPENDENTLY OF BROADER MARKET TRENDS.
”
Tammy Fahmi, senior vice president, global servicing and strategy, Sotheby’s International Realty
In many places listings are being buoyed by new developments, especially branded residences. This high-service, low-maintenance model is expanding into new markets and continuing to attract homebuyers—a July 2025 report by Yahoo Finance estimates that the Middle East and Africa will see 270% growth in branded residences over the next seven years.5 It’s also apparent that “what’s old is new again,” as the adage goes, as developers renovate historic buildings with modern interiors. This is certainly the case in Spain, where affluent homebuyers from South America prefer traditional exteriors with an old-school feel, says Ugo Bagration, regional director for East Andalusia, Spain Sotheby’s International Realty.
“Overall, the luxury real estate market is rewarding quality and authenticity over simply having a home for sale,” Fahmi says. “While some homes may remain on the market for significantly longer, exceptional properties in popular regions still attract homebuyers relatively quickly.”
Branded residences, like the triplex Crown Penthouse in Raffles the Palm, are contributing to the expanding luxury property market in Dubai, United Arab Emirates.
Dubai Sotheby’s International Realty
Inventory increases across the U.S.
The number of homes on the market in the U.S. dropped to historic lows during the pandemic, according to a July 2025 report by the Federal Reserve Bank of St. Louis.6 This frustrated cash-ready homebuyers, who faced limited inventory and intense competition. But the supply has now bounced back.
In response to questions for this report, the National Association of REALTORS® (NAR) noted there were five months’ worth of inventory of existing homes priced over US$1 million available in the U.S. in October 2025, up from 4.5 months in August 2025. “Current inventory is at its highest since May 2020, during the COVID-19 lockdown,” Lawrence Yun, NAR’s chief economist, wrote in an August 2025 report.7 Total housing supply across all segments rose 11.7% year over year, according to NAR data released in September 2025.8
Many homeowners were feeling “locked in” because of low mortgage rates they negotiated during the pandemic, Yun says. “Lower rates—which the Federal Reserve cut by a quarter point each month in September and October 2025—could help home sellers come off the fence, adding even more inventory. That’s important to affluent homebuyers, even those who don’t need a mortgage. While many pay cash, they behave as if the interest rate really is important in a home purchase. In Aspen, Colorado, for example, homes are very expensive, but when you look at how sales spike or decline, they follow mortgage rate changes, even though more than half of the purchases are all-cash.”
The increase in inventory of homes priced at US$1 million or more means “we are seeing more transactions in the upper end proportionately, compared to the rest of the market,” Yun adds. “That clearly implies that inventory availability is important in getting the market moving.”
U.S. housing supply
Source: U.S. Census Bureau, September 2025
The number of new homes in the U.S. awaiting homebuyers
U.S. housing inventory
Source: National Association of REALTORS®, “NAR Existing-Home Sales Report Shows 0.2% Decrease in August,” September 25, 2025
Regional variations on both sides of the market
“This trend is particularly pronounced in certain luxury property markets,” Fahmi says. Houston, Texas, for example, is seeing notable inventory increases. Supply was up 27% year-over-year in the city in July 2025, but in prime neighborhoods, availability is still limited, and homes sell quickly, says Taylor Jackson, global real estate advisor, Martha Turner Sotheby’s International Realty. “If I have a listing in a sought after neighborhood and I’ve priced it right, I’m seeing multiple offers, often above the asking price, with homebuyers waiving contingencies.”
Residential supply is tightest in the Northeast and Upper Midwest, with the hottest home sellers’ markets found in major metropolitan locations, including Milwaukee, Wisconsin; Chicago, Illinois; Philadelphia, Pennsylvania; Minneapolis, Minnesota; and New York, New York, according to an August 2025 report by MarketWatch.9
In contrast, homebuyers have the upper hand in property markets in the South and West, according to the same report. Las Vegas, Nevada, was a standout, with housing inventory seeing a 44.8% annual increase in June 2025 and home prices plateauing.
Hitting the right spot in Houston
As Jackson says, inventory has risen in Houston, Texas. Matching a 28% bump in supply across the city,10 in the high-end Memorial Villages—including Hunters Creek, Piney Point and Hedwig—inventory rose 29% year-over-year in the third quarter of 2025, according to October 2025 data from Martha Turner Sotheby’s International Realty.11 “The villages are very sought after because there are good schools and you typically have larger lots,” she says. “I’ve seen lot value go as high as US$20,000 a square foot.”
Another neighborhood attracting homebuyer interest is Briargrove Park, a small area to the west of Houston, where Jackson has seen “incredible appreciation.” There, inventory rose 10% year-over-year in the third quarter, the data showed.12
Residences in these hotspots—even those that need extensive renovation or a total tear-down—can garner multiple offers. “I listed a home for US$2 million, knowing it was a strategic price given the property’s condition. The market responded strongly. We had 11 offers, and it sold for US$700,000 over the asking price,” Jackson says.
Some of her older clients, including couples who are downsizing, are having issues finding the right property. “They can’t believe how much prices have gone up. It’s almost like they are having to look for a unicorn.”
For home sellers, it’s all about setting the price right and letting the market dictate the value. “The good houses that are sitting on the market for longer periods are priced too high, and the home sellers and homebuyers can’t come to an agreement,” Jackson says.
Inventory in Houston, Texas (year-over-year, October 2025)
Source: Martha Turner Sotheby’s International Realty
Increase across the city
Increase in Memorial Villages
Increase in Briargrove Park
Healthy sales in Washington, D.C.
Meanwhile, markets in the Northeast are seeing a rise in luxury real estate sales. “TTR Sotheby’s International Realty in Washington, D.C., has achieved a significant increase in luxury home sales,” Fahmi says. “The number of US$10 million-plus sales increased by 50% between 2023 and 2024 and has increased again by 43% so far in 2025.”
That is an especially high figure for the Washington, D.C., market, where the starting price for a luxury home is less than in other major metropolitan areas—around US$6 million, according to David DeSantis, partner and managing broker, TTR Sotheby’s International Realty. These high-end listings—more than half of which are handled by his office—are not sitting on the market for long, he says. “We have 26 active listings, and we’re on pace to do 30 sales in 2025. That’s a pretty balanced and healthy market,” he says, noting that by August 2025 they had sold 17 luxury homes. “Included in those are some big sales—over US$20 million.”
Inventory in Washington, D.C. (2023-25)
Source: TTR Sotheby’s International Realty
High-end properties in Washington, D.C., like this renovated Victorian home, do not sit on the market for long.
TTR Sotheby’s International Realty
The global picture
Internationally, inventory patterns vary dramatically by region, says Fahmi. “Across the Caribbean, availability has remained relatively constrained compared to pre-COVID levels, with demand for second homes and oceanfront residences continuing to outpace supply.” This is echoed in the 2026 Sotheby’s International Realty agent survey, in which 50% of respondents from the region reported that inventory had slightly or significantly decreased over the past year.
That is certainly the case in the Cayman Islands, where waterfront properties are scarce, pushing up prices and fueling strong competition between homebuyers, according to data released in May 2025 by Cayman Islands Sotheby’s International Realty.13
The Turks and Caicos Islands are also seeing “an inevitable recalibration period” after an extended surge in business, according to a July 2025 report from Turks & Caicos Sotheby’s International Realty.14 Inventory across the market increased 20% year over year in the second quarter of 2025, with the average time on the market rising from 189 to 238 days, “creating a more measured homebuyer outlook,” the report said.
“In contrast, some traditionally tight European real estate markets, such as Spain, are now showing increased inventory availability, while Portugal demonstrates strong market growth with significant increases in transactions and new luxury developments,” Fahmi says. “Meanwhile, in Asia, Thailand is seeing luxury branded residences leading the next wave of development.”
The Turks and Caicos Islands have seen a noticeable jump in inventory since 2024, including this five-bedroom beachfront property
Turks & Caicos Sotheby’s International Realty
Inventory in the Turks and Caicos Islands (year-over-year, July 2025)
Source: Turks & Caicos Sotheby’s International Realty
Opportunities in the south of Spain
Investors appreciate the value proposition in Spain, where they can generally expect about 5% to 10% year-over-year appreciation, says Bagration. But once again, supply varies dramatically depending on location and the quality of the property.
“There has been a huge surge in new developments and off-plan purchases, especially in the south and the east. There are a vast number of new projects in the pipeline that are attracting international homebuyers and alleviating the scarcity we have when it comes to luxury inventory.”
This new supply is attracting younger buyers, with Millennial (born 1981-96) and Generation X (born 1965-80) homebuyers replacing Baby Boomers (born 1946-64). “A big chunk of these new homebuyers prefers more contemporary and modern developments,” he adds. “This does not mean that demand for traditional Spanish Mission-style homes is not strong: they are still a top choice for many of our very affluent families.”
Meanwhile, South American homebuyers have flooded cities like Madrid, he says. Investors from the U.S., Canada, South America and the Middle East are also discovering Spain, with many choosing to become permanent residents.
Newly built homes in Spain, such as this estate, which blends contemporary Mediterranean architecture with the traditional styles of Mallorca, are attracting international homebuyers.
Spain Sotheby’s International Realty
“ THERE HAS BEEN A HUGE SURGE IN NEW DEVELOPMENTS AND OFF-PLAN PURCHASES.
”
Ugo Bagration, regional director for East Andalusia, Spain Sotheby’s International Realty
Pushing prices up in Portugal
Portugal also offers a lifestyle sought by many international homebuyers, especially people from the U.K., the U.S. and Germany, according to Portugal Sotheby’s International Realty.
In 2024, total home sales rose 14.5% compared to the previous year, according to data published in March 2025 by the Instituto Nacional de Estatística (INE), Portugal’s government office for statistics.15 The total value of transactions reached EU€33.8 billion (US$39.2 billion) in 2024, a nearly 21% annual increase.
That trend continued into 2025. In the first half of the year, total property sales spiked 34% annually for Portugal Sotheby’s International Realty, and home prices were up 16.3% year over year in the first quarter, according to the INE’s data report.
Strong demand and limited supply are putting upward pressure on prices, says Miguel Poisson, chief executive officer, Portugal Sotheby’s International Realty. The capital, Lisbon, where much of the country’s ultra-prime real estate is concentrated, continues to attract homebuyers, while Porto and the Algarve are also popular. “We are seeing premium residential development in new zones that appeal to homebuyers seeking exclusivity,” Poisson says.
“ WE ARE SEEING PREMIUM RESIDENTIAL DEVELOPMENT IN NEW ZONES THAT APPEAL TO HOMEBUYERS SEEKING EXCLUSIVITY.
”
Miguel Poisson, chief executive officer, Portugal Sotheby’s International Realty
A Hollywood boost in Thailand
The market in Thailand is becoming more competitive, says Phakrjira Jansakran, director of sales, List Sotheby’s International Realty, Thailand. “Our homebuyers now have more options and leverage, especially in and around Bangkok and Phuket.”
One area that is seeing increasing demand is Koh Samui, which has benefited from a Hollywood boost: since the third season of HBO’s hit television drama “The White Lotus” was filmed at the Four Seasons Resort on the island, international homebuyers have been flocking there.
“Phuket and Koh Samui have solidified their reputations as Asia’s leading destinations for lifestyle-focused property investment,” Jansakran says. “Demand from international homebuyers remains strong, and we’re now seeing a clear increase in luxury inventory—particularly in the US$10 million-plus segment.”
However, despite their popularity, upscale residences can take eight to 12 months to sell, according to data compiled by List Sotheby’s International Realty, Thailand. “Ultra-high-end units may take longer to find the right homebuyer but typically achieve premium prices when sold,” adds Jansakran.
Luxury properties in Thailand are benefiting from a Hollywood boost thanks to the TV drama “The White Lotus.”
LIST Sotheby’s International Realty, Thailand
Buying into the brands
Branded residences are one of the biggest drivers of inventory around the world. They appeal to international homebuyers because of global brand recognition, guaranteed privacy and the flexibility of ownership options. In Thailand’s capital, Bangkok, “the best value lies in well-managed branded residences, which have better rental yield and capital preservation,” Jansakran says. Discussions about several projects on Koh Samui have already begun, she adds.
Branded residences also represent the biggest growth segment on the Costa del Sol of Spain, says Bagration. Hotel chains such as Four Seasons, Hilton and Marriott, and top-tier brands including Dolce & Gabbana and Lamborghini have recently broken ground in the region, he says. Although these types of projects have already found success elsewhere, they are new to Spain—and are paying off.
“Major luxury brands are collaborating with well-established developers in joint ventures to build them in record time,” he adds. “We’re seeing the highest prices per square meter on the Costa del Sol in the branded residence segment—US$20,000 to US$25,000.”
Homebuyers who buy off-plan can expect healthy returns as soon as the project is completed. “If they decide to sell immediately, the return can be anywhere between 20% and 25%,” Bagration says. “We’re seeing a major influx of investors purchasing several units within the same development.”
Portugal is also seeing branded residences gain traction. The beach town of Comporta, just south of Lisbon, has been attracting new interest, as have coastal destinations west of the capital, like Cascais, Estoril and Oeiras.
In the U.S., Miami, Florida, is the center of the branded residence world, although there are also developments in New York City and other luxury markets, such as Washington, D.C. In March 2025, Four Seasons Private Residences announced plans to build 64 new ultra-luxury homes in Georgetown,16 while all 96 units in the Rafael Viñoly-designed Amaris, located in The Wharf neighborhood, were sold out as of July 2025, according to the building’s owner.
Not a true homebuyers’ market—yet
Without question, the luxury real estate market has changed dramatically over the past five years. Opportunities exist for homebuyers and home sellers, “though it requires more strategic thinking than we’ve seen in years past,” Fahmi says. “With inventory levels up from last year, homebuyers have more choice in certain markets and price points, giving them leverage to be more discerning.”
In the U.S., lower interest rates are also a catalyst for the market, DeSantis says. “We are already seeing increased homebuyer activity as a result of interest rates dropping,” he says. “I suspect even more homebuyers will come out of the woodwork, presuming the economy stays relatively stable.” However, Jackson notes that mortgage rates probably won’t reach the historic lows seen during the pandemic, so this is unlikely to affect prices right away. “When the interest rate drops, homebuyers who were staying put due to their low mortgage rate might enter the market,” she says. “There would be more competition, and you might end up paying more in multiple-offer situations.”
The shifting market means it’s more important than ever for home sellers to find the right price when considering a sale. And for today’s luxury homebuyers, any increase in inventory represents a selective opportunity rather than a broad advantage. Success requires identifying markets where supply and demand create leverage, while recognizing that premier locations continue to reward decisive, cash-ready purchases.
“Sotheby’s International Realty affiliated agents believe that while it isn’t a true homebuyers’ market just yet, home sellers need to be realistic about pricing—the luxury real estate market rewards properties that are well-positioned and properly marketed,” Fahmi says.
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