The price to enter the US luxury housing market reached $1.3 million on average in 2025. According to a new Sotheby’s International Realty study, this threshold has jumped over $300,000 in the past decade. However, the definition of “luxury” varies dramatically by location, with entry points in major cities far exceeding the national figure.
National Averages and Tiered Luxury Markets
Sotheby’s defines the luxury home threshold as the top 10% of home values in any market. In 2025, that national entry point was $1.3 million. Beyond this tier, the market segments further. High-end luxury properties (the top 5%) started at $2 million. Meanwhile, the ultra-luxury tier (the top 1%) began at a striking $5.4 million. This stratification shows the vast wealth concentration at the market’s peak.
Stark Regional Differences: Coastal Extremes
The national average masks extreme regional disparities. In Los Angeles, the luxury threshold was $3.9 million, triple the national figure. In New York City, it stood at $2.8 million. These metro areas exemplify how local economies and buyer demand create vastly different benchmarks for luxury.
Why the Luxury Market Is Outperforming
The broader housing market has struggled with high interest rates and affordability. Conversely, the luxury segment has shown remarkable resilience. Sotheby’s CEO Philip A. White notes this market benefits from factors like increased all-cash sales, growing international buyer activity, and rising inventory. Essentially, high-net-worth buyers are less sensitive to mortgage rate fluctuations, insulating the luxury sector.
Key Market Drivers: Wealth Transfer and Inventory
Two major forces are shaping the luxury landscape. First, the “Great Wealth Transfer” is underway, with an estimated $100 trillion passing from Boomers to younger generations through 2048. This infusion of capital directly fuels high-end real estate demand. Second, after years of shortage, luxury inventory levels are normalizing. Sotheby’s Chief Marketing Officer Bradley Nelson states inventory has largely returned to pre-pandemic norms, creating healthier, more balanced conditions for buyers.
The 2026 Outlook: Continued Luxury Strength
The report projects continued outperformance for luxury real estate in 2026. The combination of strong demand fundamentals, rebounding inventory, and significant wealth movement suggests the sector will maintain its momentum. While economic pressures may cool the broader market, the high-end segment appears insulated for the near future.
A Market Defined by Extremes
The US luxury housing market is a tale of two realities: a resilient, high-value sector thriving on wealth concentration, and a broader market facing affordability crises. The $1.3 million national threshold is just a starting point, with true luxury in premier cities requiring millions more. As wealth transfer accelerates and inventory stabilizes, the luxury segment is poised to remain a distinct and powerful force in the real estate landscape.
