The luxury home market may be losing some of its luster.
Average sales prices for homes listed at $1 million or more fell 1.1 percent in the first quarter compared with a year earlier, marking the biggest decline in more than two years, according to Redfin.
The decline at the top marks a stark contrast with the broader housing market, which continues to gain strength. The bottom 95 percent of the housing market saw prices jump 4.7 percent in the first quarter compared with a year ago.
Sales volume of homes priced at $1 million or more rose 4.9 percent — marking slower growth than the rest of the market, where sales volume grew 6 percent.
The weakness at the top of the housing market marks a big shift in the housing economy. After the financial crisis, luxury housing was the strongest segment of the market due to the strong recovery of the wealthy. Now, with stock markets more volatile, demand slowing from overseas buyers and a surging supply of high-priced homes, the top of the market is now among the weakest.
"For years, the high end was driving sales and price," said Nela Richardson, chief economist at Redfin. "Now, the demand is at the middle and lower price range."
She added that after 2009, the asset-rich benefited from rising values.
"There was so much stability in asset growth that the wealthy felt comfortable making a large purchase," she said. "That stability is over."
According to Redfin's report, which measures sales in most major metro markets in the U.S. (excluding New York), there were 16,061 homes sold in the first quarter for $1 million, down from 19,583 in the fourth quarter and up from 15,318 in the first quarter of 2015.
Sales of homes priced at $5 million or more fell 0.2 percent compared with a year ago — the biggest decline since 2013. There were 420 sales of homes priced at $5 million or more in the quarter.
Inventory of homes priced at $1 million or more increased 3.3 percent compared with a year ago, to 70,962. The supply of homes priced at $5 million or more jumped 13 percent — the biggest inventory rise in more than three years.
"There is oversupply at the high end, especially in certain pockets and cities," Richardson said.
It's not just megamansions in Houston or penthouse condos in Miami Beach or Manhattan's "Billionaire's Row" that are sitting unsold. Richardson said affluent communities like Montgomery, Maryland, have rising numbers of $1 million or $1.5 million homes on the market with no buyers.
"They should be flying of the shelves," she said. "But these homes are just sitting there."
All that supply at the top, coupled with a more anxious buying class, has created some big price cuts for mansions and penthouses. An $18.8 million home in Los Angeles ended up trading for $10 million in the first quarter, while a $14 million home in The Woodlands, Texas, ended up selling for $7 million.
The highest-priced sale in the quarter (outside New York) was the $45 million sale of a 2.2-acre estate in North Laguna, California, called Twin Points. The estate features sweeping ocean views, a Polynesian-themed main residence, pool and motor court. It was originally listed for $75 million.
Correction: Sales of homes for $1 million or more rose in the first quarter of 2016, compared to the year-earlier period. This fact was misstated in one reference in an earlier version.