Property data curator ATTOM’s Year-End 2023 U.S. Home Sales Report shows homesellers made a $121,000 profit on the typical sale in 2023, generating a 56.5 percent return on investment.
But even as both gross profits and profit margins remained near record levels, they decreased from 2022, marking the first declines in either category since 2011.
The gross profit on median-priced single-family homes sales dipped from $122,600 in 2022 while the profit margin dropped year-over-year from 59.8 percent. That happened as the median nationwide home price rose at the smallest annual pace in more than a decade.
“Last year certainly stood out as another very good year for homesellers across most of the United States. Typical profits of over $120,000 and margins close to 60 percent were still more than double where they stood just five years earlier,” ATTOM CEO Rob Barber said in a release. “But the market definitely softened amid modest price gains that weren’t enough to push profits up higher after a long run of improvements. In 2024, the stage seems set for more small changes in prices as well as seller gains given the competing forces of interest rates that have headed back down in recent months and home supplies that remain tight, but homeownership costs that remain a serious financial burden for many households.”
The profit fallback came during a year of ups and downs for the housing market that featured flat prices early in 2023, followed by a spike in the spring and a drop-off in the fourth quarter. Price patterns were mixed as the upward pressure of strong employment and investment markets, along with a historically tight supply of homes, competed with the downward force of home-mortgage rates that rose during most of 2023.
Among 129 metropolitan statistical areas with a population greater than 200,000 and sufficient sales data, sellers in western and southern states again reaped the highest returns on investment (ROI) in 2023. The West and South regions had 12 of the 15 metro areas with the highest ROIs on typical home sales last year, led by San Jose, Calif. (99.4 percent return on investment); Knoxville, Tenn. (98.1 percent); Seattle (92.9 percent); Spokane, Wash. (90.6 percent) and Scranton, Pa. (89.6 percent), according to ATTOM.
The median home price increased 2.1 percent from 2022 to 2023, reaching another all-time annual high of $335,000. The typical 2023 price has more than double the nationwide median in 2011, a point in time right before the housing market began recovering from the aftereffects of the Great Recession that hit in the late 2000s.
However, ATTOM noted the 2023 increase represented the smallest annual bump during the extended boom period that began in 2012. The full-year median home-price appreciation slowed down as interest rates rose in 2023 close to 8 percent for a 30-year mortgage.
While gains were mostly small, median prices still rose from 2022 to 2023 in 97, or 75 percent, of the 129 metropolitan statistical areas with a population of 200,000 or more and sufficient home price data last year. Those with the biggest year-over-year increases were Hilton Head, S.C. (median up 12.2 percent); Naples, Fla. (up 10.6 percent); Hartford, Conn (up 10.5 percent); Savannah, Ga. (up 10.5 percent) and Rochester, N.Y. (up 9.7 percent).
Aside from Hartford and Rochester, the largest median-price increases in metro areas with a population of at least 1 million in 2023 came in Miami (up 8.6 percent); Cincinnati (up 8.1 percent) and Milwaukee (up 6.9 percent).
Metro areas where median prices dropped most in 2023 were Austin, Texas (down 6.2 percent); San Francisco (down 4.4 percent); Stockton, Calif. (down 4.4 percent); Boise, Idaho (down 4.1 percent) and Phoenix (down 3.8 percent).
ATTOM data shows profit margins on typical home sales decreasing from 2022 to 2023 in 84 of the 129 metro areas with sufficient data to analyze (65 percent). That happened as the 2.3 percent jump in the median sale price nationwide in 2023 fell behind the typical 4.4 percent increase recent sellers had been paying when they originally bought their homes.
The 40 largest decreases in investment returns were all in the South or West, led by Port St. Lucie, Fla. (ROI down from 104.5 in 2022 to 82.7 percent in 2023); Austin, Texas (down from 67.2 percent to 46.2 percent); Phoenix (down from 79.3 percent to 60.6 percent); Reno, Nev. (down from 80.6 percent to 64.5 percent) and Salt Lake City (down from 68.3 percent of 52.2 percent).