ATTOM has released its second-quarter 2023 U.S. Home Sales Report, which shows 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 – the first gain in a year.
The improvement in typical profit margins, from 43.9 percent in the first quarter of 2023, came amid a rebound in the U.S. 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, even as seller fortunes turned around in the second quarter, the typical investment return nationwide did remain below the recent high point of 53.2 percent, recorded a year earlier during the second quarter of 2022.
“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,” said Rob Barber, CEO for ATTOM. “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 the second quarter of 2023. 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.
The about-face in profits and prices around the U.S. during the second quarter reflected a housing market in flux.
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, 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. As the 2023 home-buying season continues, the prospect of even better seller profits remains in place but will depend heavily on whether any or all of those factors improve or decline.
Profit margins grow quarterly in two-thirds of U.S. but remain down annually
Typical profit margins – the percent difference between median purchase and resale prices – increased from the first quarter of 2023 to the second quarter of 2023 in 107 (69 percent) of the 156 metropolitan statistical areas around the U.S. with sufficient data to analyze. However, they were still down in 118, or 76 percent, of those metros compared to the second quarter of last year, as the recent improvements were not enough to wipe out losses sustained from the middle of 2022 to the early part of 2023.
Metro areas were included if they had sufficient population and at least 1,000 single-family home and condo sales in the second quarter of 2023.
The biggest quarterly increases in typical profit margins came in the metro areas of Barnstable, MA (margin up from 47 percent in the first quarter of 2023 to 69.2 percent in the second quarter of 2023); Fort Wayne, IN (up from 46.7 percent to 65.5 percent); Augusta, GA (up from 45.7 percent to 64.1 percent); Rochester, NY (up from 50.9 percent to 68 percent) and Charleston, SC (up 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 in the second quarter of 2023 were in Grand Rapids, MI (return up from 63.9 percent to 76.5 percent); Raleigh, NC (up from 35.8 percent to 47.7 percent), Hartford, CT (up from 38.5 percent to 50.1 percent) and San Diego, CA (up from 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 (margin down from 86.9 percent in the first quarter of 2023 to 70.2 percent in the second quarter of 2023); Hilo, HI (down from 101.5 percent to 86.7 percent); Detroit, MI (down from 90 percent to 76 percent); Spartanburg, SC (down from 60.6 percent to 46.6 percent) and Flint, MI (down from 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, PA (down from 50.9 percent to 40.2 percent); Buffalo, NY (down from 70.9 percent to 61.5 percent); Indianapolis, IN (down from 48.7 percent to 40.4 percent) and Honolulu, HI (down from 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, TX (margin down from 80.3 percent in the second quarter of 2022 to 47.2 percent in the second quarter of 2023), San Francisco, CA (down from 85.1 percent to 59.4 percent); Phoenix, AZ (down from 75.8 percent to 51.6 percent); Salt Lake City, UT (down from 69.3 percent to 46.4 percent) and Las Vegas, NV (down from 66.5 percent to 46.5 percent).
Raw profits up in almost 90 percent of housing markets
Profits on median-priced home sales nationwide, measured in raw dollars, increased from $96,573 in the first quarter of 2023 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.
The biggest quarterly raw-profit increases in areas with a population of at least 1 million were in Birmingham, AL (up 47 percent); Rochester, NY (up 44 percent); St. Louis, MO (up 37 percent); Hartford, CT (up 35 percent) and Cleveland, OH (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, TX (down 36 percent); Birmingham, AL (down 32 percent); Salt Lake City (down 28 percent); San Francisco, CA (down 27 percent) and Phoenix, AZ (down 27 percent).
The largest raw profits on median-priced sales in the second quarter of 2023 were in San Jose, CA (profit of $600,000); San Francisco, CA ($416,000); San Diego, CA ($301,500); Seattle, WA ($285,000) and Naples, FL ($265,905).
The smallest were in Shreveport, LA ($14,000); Beaumont, TX ($24,943); Rockford, IL ($38,140); McAllen, TX ($41,407) and Toledo, OH ($43,000).
Prices up quarterly in more than 90 percent of nation
Median single-family home and condo prices increased from the first to the second quarter of 2023 in 150 (96 percent) of the 156 metro areas around the country with enough data to analyze and were up annually in 94 of those metros (60 percent).
Nationwide, the median home price rose to $350,000, up 10.4 percent from $317,000 in the first quarter of 2023 and 2.4 percent over the previous record of $341,750, set in the second quarter of last year.
Among metro areas, the biggest increases in median home prices from the first quarter of 2023 to the second quarter of 2023 were in Rochester, NY (up 20 percent); Madison, WI (up 19.1 percent); Bridgeport. CT (up 18.6 percent); St. Louis, MO (up 17 percent) and Augusta, GA (up 16.9 percent).
Aside from Rochester and St. Louis, the largest median-price increases during the second quarter of 2023 in metro areas with a population of at least 1 million were in Detroit, MI (up 15.8 percent); Birmingham, AL (up 15.6 percent) and Grand Rapids, MI (up 14.5 percent).
Home prices tied or hit new highs during the second quarter of 2023 in 89, or 57 percent, of the 156 metro areas in the report. Metro areas with a population of more than 1 million that set or tied records in the second quarter included Chicago, IL; Miami, FL; Dallas, TX; Washington, DC, and Atlanta, GA.
The only metro areas with a population of at least 1 million where the median home price declined from the first to the second quarter of 2023 were Honolulu HI (down 1.4) and Salt Lake City (down .03 percent).