China made up the single-largest source of foreign investment in the U.S. existing homes market last year, according to a new report from the National Association of Realtors. Photo by Jason Leung from unsplash.com

It wasn’t just Americans looking to gain from the booming U.S. housing market. Foreign investment in existing homes broke a three-year skid last year — and California was a popular landing place.

International buyers purchased $59 billion worth of homes from April 2021 to March 2022. This represents an 8.5% increase from the previous 12-month period, ending a three-year decline in foreign investment in U.S. residential real estate, according to the National Association of Realtors.

At the same time, the 98,600 homes purchased by foreign investors were 7.9% lower than the prior period — making up the fewest number of homes purchased since 2009.

In total, foreign investment made up 2.6% of the $2.3 trillion in existing home sales in the period.

The California market garnered 11% of all foreign investment dollars — second only to Florida with 24% of market share. Texas came next with 8% foreign investment share, followed by Arizona with 7% and New York and North Carolina tied with 4%.

“For the second year in a row, restrictions and general caution tied to international travel during the pandemic slowed home buying by wealthier foreign buyers,” said NAR Chief Economist Lawrence Yun. “Even so, domestic home buying demand was exceptional and, therefore, boosted home sales nationally.”

China was the top foreign investor in U.S. homes, spending $6.1 billion, followed by Canada with $5.5 billion. Next came India with $3.6 billion, then Mexico with $2.9 billion and Brazil with $1.6 billion.

Foreign buyers living in the U.S. made up the lion’s share of investors, buying $34.1 billion worth of U.S. homes — or 58% of the volume.

All-cash sales accounted for 44% of transactions, almost twice the rate of all existing-home buyers. Sixty percent of foreign buyers not living in the U.S. paid all cash for homes compared to 30% of resident foreign buyers.

According to the survey, 44% of investors purchased their properties for use as a vacation home, rental property or both.

“Due to rising interest rates, overall home sales will decline in the U.S. this year. Foreign buyers, however, are likely to step up purchases, as those making all-cash offers will be immune from changes in interest rates,” said Yun. “In addition, international flights have increased in recent months with the lifting of pandemic-related travel restrictions.”