Property data curator ATTOM released its third-quarter 2023 U.S. Home Sales Report, showing that profit margins on median-priced single-family home and condo sales increased to 59 percent in the third quarter, the second straight quarterly increase following several declines.
The improvement in typical profit margins, from 56.6 percent in the second quarter, came amid a continued rebound in the U.S. housing market that pushed the median nationwide home price up 2 percent to a new high of $350,000.
Both the nationwide profit margin and median home price have increased since an unusual decline from the middle of 2022 to the early part of 2023 that had threatened to reverse a decade-long market boom.
However, even as seller fortunes improved again in the third quarter, the typical investment return nationwide did remain below the 62 percent level recorded in the third quarter of 2022 and a high point of 62.3 percent in the second quarter of last year.
“Prices and profits around the U.S. got another boost over the summer as the housing market continued recovering from last year’s setbacks,” ATTOM CEO Rob Barber said in a release. “Things do remain uncertain heading into the market’s annual fall slowdown, especially at a time when mortgage rates are rising again, home affordability is getting tougher and the potential for a recession hangs in the air. But the latest gains fell in line with what we often see during the third quarter and showed that any predictions of an extended market fallback may have been premature.”
Gross profits on typical single-family home and condo sales across the country also went up during the third quarter. They rose 5 percent quarterly, to $129,900, and were up 3.2 percent annually, according to ATTOM.
Continued gains in profits and prices around the U.S., while representing typical growth for a third-quarter period, still came amid a mix of forces that could turn the market up or down over the coming months.
Both measures improved over the summer as the supply of homes for sale in the U.S. remained historically low. That put upward pressure on prices, which, by extension, helped to push up profits. But mortgage rates started increasing again in the third quarter, rising toward an average of 8 percent for 30-year fixed loans following a stable second quarter. Consumer-price inflation also ticked back up after dropping dramatically over the prior year from 9 percent to 3 percent, while the stock market declined and the national unemployment rate rose close to 4 percent, ATTOM found.
Typical profit margins – the percent difference between median purchase and resale prices – increased from the second to third quarter in 85 (55 percent) of the 155 metropolitan statistical areas around the U.S. with sufficient data to analyze. However, they were still down annually in 103, or 66 percent, of those metros as the recent improvements were not enough to wipe out the earlier losses.