Property data curator ATTOM released its second quarter 2023 U.S. Home Sales Report, showing that profit margins on median-priced single-family home and condo sales in the United States increased to 47.7 percent in the second quarter from 43.9 percent in the first quarter – the first gain in a year.
The improvement in typical profit margins came amid a rebound in the housing market that pushed the median nationwide home price up 10 percent quarterly to $350,000. Both the nationwide profit margin and median home price increased after three straight quarterly drop-offs that had begun to reverse a decade-long market boom.
However, the typical investment return nationwide remained below the recent high point of 53.2 percent, recorded a year earlier.
“Just when it looked like the housing market was flattening out, prices spiked again, which pushed seller profits back up to nearly their highest level in the past decade,” Rob Barber, CEO for ATTOM, said in a release. “Stable mortgage rates, an ongoing tight supply of homes for sale and the usual springtime surge in buyer demand appeared to have combined to halt the downturn we started seeing a year ago. It’s way too early to predict another long-term price run-up, especially since buying a home is a financial stretch for so many households around the country. But the second-quarter numbers clearly show the market has more steam left in it, and sellers are reaping the benefits.”
Gross profits also shot up from the first to second quarter. They rose 17 percent on the typical single-family home and condo sale across the country, to $113,000, although they were still down 5 percent annually, according to ATTOM.
After a decade of almost continual increases, home prices dipped across most of the country in the middle of 2022 and continued declining through the first quarter of 2023. The national median price dropped 7 percent during that time as rising home-mortgage rates, high consumer price inflation and a faltering stock market cut into what potential buyers could afford.
Prices and profits went back up in the second quarter during the start of the annual buying season, which ATTOM said was helped along by several forces. They included the nation’s limited supply of homes for sale, mortgage rates that stabilized at around 6.5 percent for a 30-year fixed-rate loan, investment market gains and an easing of inflation.
Typical profit margins increased from the first to second quarter in 107 (69 percent) of the 156 metropolitan statistical areas around the U.S. with sufficient data for ATTOM to analyze. However, they were still down in 118, or 76 percent, of those metros compared with the second quarter of last year.
The biggest quarterly increases in typical profit margins came in the metro areas of Barnstable, Mass. (up from 47 percent in the first quarter to 69.2 percent in the second quarter); Fort Wayne, Ind. (46.7 percent to 65.5 percent); Augusta, Ga. (45.7 percent to 64.1 percent); Rochester, N.Y. (50.9 percent to 68 percent) and Charleston, S.C. (from 37.7 percent to 52 percent).
Aside from Rochester, the biggest quarterly profit-margin increases in metro areas with a population of at least 1 million were in Grand Rapids, Mich. (from 63.9 percent to 76.5 percent); Raleigh, N.C. (35.8 percent to 47.7 percent), Hartford, Conn. (38.5 percent to 50.1 percent) and San Diego (45.3 percent to 56.7 percent).
Typical profit margins decreased quarterly in just 49 of the 156 metro areas analyzed (31 percent). The biggest quarterly decreases were in Scranton, Pa. (down from 86.9 percent in the first quarter to 70.2 percent in the second quarter); Hilo, Hawaii (101.5 percent to 86.7 percent); Detroit (90 percent to 76 percent); Spartanburg, S.C. (60.6 percent to 46.6 percent) and Flint, Mich. (91.6 percent to 80.5 percent).
Aside from Detroit, the largest quarterly decreases in profit margins among metro areas with a population of at least 1 million came in Pittsburgh (50.9 percent to 40.2 percent); Buffalo, N.Y. (70.9 percent to 61.5 percent); Indianapolis (48.7 percent to 40.4 percent) and Honolulu (47.1 percent to 41.1 percent).
Metro areas with a population of at least 1 million where typical profits remained down the most annually included Austin, Texas (80.3 percent in the second quarter of 2022 to 47.2 percent in the second quarter of 2023), San Francisco (85.1 percent to 59.4 percent); Phoenix (75.8 percent to 51.6 percent); Salt Lake City (69.3 percent to 46.4 percent) and Las Vegas (66.5 percent to 46.5 percent).
Profits on median-priced home sales nationwide, measured in raw dollars, increased from $96,573 in the first quarter to $113,000 in the second quarter, a 17 percent gain. Typical raw profits went up quarterly in 137, or 88 percent, of the metro areas analyzed for this report.
Annually, however, raw profits remained down 4.6 percent from a record high of $118,400 in the second quarter of 2022. They dropped year-over-year in 65 percent of the markets analyzed, ATTOM said.
The biggest quarterly raw-profit increases in areas with a population of at least 1 million were in Birmingham, Ala. (up 47 percent); Rochester, N.Y. (up 44 percent); St. Louis (up 37 percent); Hartford, Conn. (up 35 percent) and Cleveland (up 33 percent).
On an annual basis, the largest year-over-year declines in raw profits on median-priced home sales among metros with a population of at least 1 million came in Austin, Texas (down 36 percent); Birmingham, Ala. (down 32 percent); Salt Lake City (down 28 percent); San Francisco (down 27 percent) and Phoenix (down 27 percent).
The largest raw profits on median-priced sales in the second quarter were in San Jose, Calif. (profit of $600,000); San Francisco ($416,000); San Diego ($301,500); Seattle ($285,000) and Naples, Fla. ($265,905).
The smallest were in Shreveport, La. ($14,000); Beaumont, Texas ($24,943); Rockford, Ill. ($38,140); McAllen, Texas ($41,407) and Toledo, Ohio ($43,000).