Sales of luxury homes — the 5% most expensive in the nation — fell 38% in the three months ended Nov. 30, 2022 from a year ago, according to real estate firm Redfin.

This is the biggest drop off since Redfin began its database of luxury home sales in 2012 and occurred as luxury home sales fell in every U.S. major metropolitan area.

Sales of non-luxury homes, those in the 35% to 65% percentile of the market by estimated value, declined 31.4% in the same period.

The biggest declines in luxury home sales were in Long Island’s Nassau County, which fell 65.6% year-over-year; San Diego (-60.4%); and San Jose, Calif. (-58.7%). The 4^th and the 5^th biggest drops were also in California, in Riverside, where sales of luxury homes skid by 55.6%, and Anaheim, down 55.5%.

The four biggest factors leading to a decline in the sale of the ritziest mansions in the U.S. were inflation, high interest rates, a plummeting stock market and recession fears, Redfin says.

However, there were other factors weighing on the minds of the richest homebuyers in the nation, namely the fact that during times of economic stress, luxury goods and big-ticket items are the first to get slashed from people’s budgets.

Many high-end homes are purchased as investment properties, and with home prices expected to fall in 2023, potential buyers do not see this as the opportune time to buy.

During the pandemic, high-end homes saw outsized growth, giving them more room to fall, Redfin adds.

Last but not least, affluent buyers also tend to own stocks, and the S&P 500 just came off its worst year since 2008.

“The luxury market and the overall housing market have lost momentum this year due to many of the same factors: inflation, relatively high interest rates, a sagging stock market and recession fears,” Redfin summarized in a blog post.

Thirty-year fixed-rate mortgages ticked down to 6.42% Thursday after topping 7% earlier this fall, according to Freddie Mac.

Seattle Redfin agent Shoshana Godwin points to this trend as a potential silver lining for those looking to sell or purchase mansions: “There has been a small shift in the market that’s not fully showing up in the data yet. With mortgage rates falling, a lot of house hunters see this as their moment to come back and compete.”

In addition, Godwin says, many of her buyers are able to get “jumbo loans” needed to buy expensive property for as low as 5%.

The median sale price for luxury homes is currently $1.1 million, and $325,000 for non-luxury homes.

Metro areas with the smallest decreases in luxury home sales in the three months ended Nov. 30, 2022 were in Kansas City, Mo., where sales were down 20.2%; Cleveland (-21.5%), Virginia Beach, Va. (-26.2%); Milwaukee (-26.4%); and Charlotte, N.C. (-28.3%).