Home Sweet Profits: Owners, Investors Reaping The Benefits Of Home Sales

In a real estate market that seems to defy gravity, profits from home sales are soaring, leaving homeowners and investors with smiles as wide as their property lines.

Profit margins on median-priced single-family home and condo sales increased to 59% in the third quarter — the second consecutive quarterly increase following several declines, according to real estate data firm ATTOM's 2023 U.S. Home Sales Report. That's up from 56.6% in the second quarter as the U.S. housing market rebound pushed the median home price up 2% to a new high of $350,000.

The latest gains are in line with what often occurs during the third quarter and showed that predictions of an extended market fallback may have been premature, ATTOM CEO Rob Barber said.

"Prices and profits around the U.S. got another boost over the summer as the housing market continued recovering from last year's setbacks," Barber said. "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."

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Typical profit margins — the difference between median purchase and resale prices — rose from the second quarter to the third quarter in 55% of the 155 U.S. metropolitan statistical areas with enough data to analyze. But they were still down in 66% of those metros because the recent improvements were not enough to erase earlier losses.

The biggest quarterly increases in typical profit margins were in Scranton, Pennsylvania, up from 72.2% in the second quarter to 92% in the third quarter; Reading, Pennsylvania, up from 70.3% to 88.5%; Flint, Michigan, up from 66.7% to 84.6%; Evansville, Indiana, up from 32.9% to 45.9%; and Roanoke, Virginia, up from 44.4% to 56.3%.

In metro areas with a population of at least 1 million, the biggest quarterly profit margin increases were in Birmingham, Alabama, up from 41.2% to 50.9%; Buffalo, New York, up from 73.9% to 82.9%; Rochester, New York, up from 65.4% to 71.9%; Kansas City, Missouri, up from 44.5% to 50.2%; and Tucson, Arizona, up from 50.3% to 64.8%.

Profits are up as the median price for a single-family home hit a new high in the third quarter. Nationwide, the median home price rose to $350,000, up 2% over the previous record of $343,000 in the second quarter.

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