$1 million home sales surge, prices stall

The luxury-home market saw a burst of sales activity in the first quarter, though prices are starting to fall.

According to the CNBC Luxury Real Estate Report, compiled by Redfin, sales of homes priced at $1 million or more were up 13 percent year over year—the strongest year-on-year increase in several quarters. Yet the average sales price fell 0.6 percent year over year, to an average of $1.83 million.

Nela Richardson, Redfin's chief economist, said the rising sales and softer prices suggest that some homes priced at $1 million or more were overpriced and are now seeing price cuts.

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"In some of these markets, like San Francisco, sellers put big prices on their homes and expected a flood of high-income buyers, but the bidding wars never materialized," she said. "The buyers are smarter today."

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For the luxury markets tracked by Redfin, which does not include New York City, there were 14,122 homes that sold for $1 million or more in the first quarter, up from 12,492 in the first quarter of 2014. There were 395 homes that sold for $5 million or more, up from 349 last year.

While sales increased, so did inventory—especially in Texas. Total inventory of million-dollar homes ticked up by 1.6 percent in the quarter, but it jumped 48.2 percent in Houston.

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Inventory of homes priced at $5 million or more rose 10 percent.

Demand remains especially high in Silicon Valley, as the tech money continues to pour into real estate. A home in Los Altos, California, sold in the first quarter for $8.5 million—more than $1.5 million above the asking price. A home in nearby Palo Alto sold for $6.5 million on an asking price of $5.5 million.