In these times, double down — on your skills, on your knowledge, on you. Join us Aug. 8-10 at Inman Connect Las Vegas to lean into the shift and learn from the best. Get your ticket now for the best price.
Record-low inventory and rebounding buyer demand buoyed U.S. homesellers’ profit margins for the first time in a year, according to a quarterly market report published Thursday by real estate data firm Attom.
Profit margins — which Attom defines as the percent difference between median purchase and resale prices — for median-priced single-family home and condo sales increased 3.8 percentage points from 43.8 percent in the first quarter to 47.7 percent in Q2.
Raw profits also jumped 17 percent quarter over quarter to $113,000.
Rob Barber | Attom Data Solutions
“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,” Attom CEO Rob Barber said in a written statement.
“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,” he added. “But the second-quarter numbers clearly show the market has more steam left in it, and sellers are reaping the benefits.”
Margins increased in 69 percent of the 156 metropolitan statistical areas that Attom studies — a result of median-home prices rising 10.4 percent quarter over quarter to $350,000. That beats the previous record of $341,750 in Q2 2022.
Fifty-seven markets’ median prices reached new highs in Q2 2023, including Chicago; Miami; Dallas; Washington, D.C.; and Atlanta. The only major metros that experienced a decline are Honolulu (-1.4%) and Salt Lake City (-.03%).
However, a boost in median prices didn’t equate to a boost in profit margins for some markets. Detroit experienced a quarterly median-price increase of 15.8 percent; however, Detroit homesellers’ profit margins slid 14 percentage points to 76 percent — placing it near the top of the list of quarterly declines.
The biggest quarterly increases were in Barnstable, Massachusetts (+22.2 pp to 47 percent); Fort Wayne, Indiana (+18.8 pp to 65.5 percent); and Augusta, Georgia (+18.4 pp to 64.1 percent). Meanwhile, the largest quarterly decreases were in Scranton, Pennsylvania (-16.7 pp to 70.2 percent); Hilo, Hawaii (-14.8 pp to 86.7 percent); and Spartanburg, South Carolina (-14 pp to 46.6 percent).
Although profit margins and gross profits improved on a quarterly basis, they’re still down annually.
Austin, Texas, experienced the biggest annual decline with typical profit margins sliding 41 percent year over year to 47.2 percent. San Francisco (-30.1%), Phoenix (-39.1%), Salt Lake City (-33.0%) and Las Vegas (-30,0%) also suffered major blows to their annual profit margin growth. Raw profits also declined 4.6 year over year from a record high of $118,400 in Q2 2022.
Despite market volatility, institutional investors increased their market presence accounting for 6.1 percent of single-family home and condo purchases in Q2. That’s up from 5.7 percent in Q1 but down from 7.4 percent in Q2 2022.
Georgia (9 percent of all sales), Tennessee (9 percent), Indiana (8.4 percent), Oklahoma (8.2 percent) and Texas (8.1 percent) had the largest share of sales to institutional investors, while Hawaii (2.4 percent of all sales), New Hampshire (3.1 percent), Rhode Island (3.3 percent), Maine (3.6 percent) and New York (3.7 percent) had the smallest.
