The flood of money pouring into U.S. real estate from the overseas rich may be slowing.
Foreign purchases of real estate in the U.S. dropped 17 percent in the 12 months ended in March compared with the same period a year ago, according to the National Association of Realtors. The high end of the market felt the brunt of it.
Sales of homes priced at $1 million or more to overseas buyers dropped to about 6.5 percent of sales from 10 percent—the sharpest drop in any price category.
There are several possible reasons for the slowdown. A stronger dollar makes U.S. real estate less attractive on a currency basis. The NAR said mortgage standards also tightened, making it harder for overseas buyers to qualify for loans.
But the main reason is economic weakness overseas. "Economic slowdowns in a number of major foreign economies appear to have been a major reason for a drop in sales; a number of potential customers apparently held off on purchases," the report said.
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Wealthy buyers from China, Brazil and Russia have been critical to the real estate recovery at the high end of the market—especially in Miami, New York and parts of California. Brokers fear that if wealth creation slows in emerging markets, high-end home sales could also weaken.
China's economic growth rate has slowed to under 8 percent. Brazil's economy has also been struggling with slower growth, along with protests and rising prices.
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Florida is the state most dependent on foreign buyers, according to the report. And that support is waning. Sales of homes to foreign buyers dropped from 31 percent of total sales to 23 percent. In Miami, foreign buyers (especially Brazilians) are even more critical, with some condo projects selling half or more of their units to Brazilians and other overseas buyers.
Wealthy Chinese have been important drivers of the high-end market. The median home price for Chinese buyers is $425,000 and more than half of their purchases were in California.
—By CNBC's Robert Frank. Follow him on Twitter @robtfrank.