Foreign buyers purchased 36% fewer properties between April 2023 and March 2024, according to a report released by the National Association of Realtors (NAR) on Wednesday. They bought 54,300 properties, which is the fewest number of homes bought since 2009 when NAR began tracking this data. Not only did they purchase fewer homes, but the amount spent on these homes was considerably less. Foreign buyers purchased $42 billion worth of U.S. existing homes last year, more than a 21% drop from the previous year.

“The strong U.S. dollar makes international travel cheaper for Americans but makes U.S. homes much more expensive for foreigners,” NAR chief economist Lawrence Yun said in a statement. “Therefore, it’s not surprising to see a pullback in U.S. home sales from foreign buyers.”

Purchasing a home in the U.S. had long been a popular choice for foreign buyers. For one, the U.S. doesn’t restrict home ownership or property rights for foreign buyers. Plus, home prices continue to rise, making home ownership in the U.S. a potentially lucrative choice—if you can afford it in the first place. 

“The U.S. real estate market has long been a beacon for international investors,” said Shelly Cofini, chief strategy officer of Redy, a platform connecting sellers to realtors. 

Like any buyer, foreign investors could be purchasing a vacation home, investment property, or making a long-term move. But home prices, mortgage rates, and limited housing inventory in the U.S. have disincentivized foreign buyers from making purchases, Confini and other real estate experts interviewed by Fortune say. But Greg Clement, CEO of real-estate software company Realeflow, says there’s more to the story. 

“Think about it—geopolitical tensions, global economic shifts, and tighter U.S. immigration policies are all at play,” Clement says. “It’s like a perfect storm. International buyers are more cautious now, considering political stability and economic prospects more than ever. They’re looking for safer bets elsewhere.”

How a decline in foreign investment affects the U.S. housing market

The decline in foreign investment could impact the U.S. housing market in several ways, from reducing competition in certain markets and lower demand for luxury properties “as international buyers often target high-end real estate,” Cofini says. Plus, there could be “potential impacts on local economies that rely heavily on foreign real estate investment.” 

The good news for U.S. homebuyers, however, is that experts agree the decreased level of demand from foreign purchasers has the potential to lower home prices here. 

Where international buyers are still purchasing

Despite the significant drop in property purchases by foreign investors, home buying in the U.S. is still relatively popular in certain markets. The top destinations for international buyers include Florida, Texas, California, Arizona, and Georgia, which collectively comprise 53% of foreign home purchases. 

Foreign buyers come from across the globe, but the most come from Canada (13% of foreign buyers), China (11%), Mexico (11%), India (10%), and Colombia (4%). 

There’s no one overarching profile of foreign homebuyers in the U.S., but they tend to “be a high-income individual or family who are looking for investment opportunities or seeking a second or residential property abroad,” Michael Collins, CEO of wealth-management firm WinCap Financial, tells Fortune. “Additionally, some international buyers might be less well off, but trying to escape events occurring in their home country.”

But what really “floored” Realeflow’s CEO Clement is the drop in purchases from Chinese buyers. Just a decade ago, Chinese buyers comprised a whopping 16% of foreign buyer purchases, but by 2021 they’d dropped to 6%. Last year, Chinese buyers comprised 11% of foreign buyer purchases.

Chinese buyers have been “major players for years, and now they’re pulling back,” Clement says. “It’s a clear shift in their economic strategy. On the flip side, we’re seeing more action from Latin America and Canada. It shows the market is diversifying, which is exciting.” Collins also found it “surprising” that Canadians were the biggest group of buyers, but it’s “likely due to the sharp increase in home prices in Canada in the last decade.” 

Another potential factor affecting foreign investment is the impending U.S. election, which could lead to policy changes that affect international home buying. The upcoming U.S. election also has the power to steer away international buyers for the foreseeable future, experts say. 

“Elections can create uncertainty, which may cause some foreign buyers to adopt a wait-and-see approach,” Cofini says. “As we look ahead, factors such as global economic recovery, the strength of the US dollar, and potential policy shifts following the U.S. election will likely shape future trends.”