The profit margins on the sales of median-priced single-family homes and condos rebounded for the first time in a year, according to a report from real estate data analytics firm ATTOM.
Profit margins increased to 47.7% in the second quarter, up from 43.9% in the first quarter, amid a rebound in the U.S. housing market that pushed the national median home price up 10% quarterly to $350,000. Both the nationwide profit margin and median home price increased after dropping for three consecutive quarters, which had started to reverse a decadelong market boom.
“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. “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.”
Home prices across most of the country dropped in the middle of last year and continued to decline through the first quarter of 2023. The national median price dropped 7% during that time as mortgage rates increased, inflation continued to rise and the stock market wavered — factors that all cut into what potential buyers could afford.
Factors boosting prices and profits include the shortage of homes for sale, mortgage rates that stabilized at around 56.5% for a 30-year, fixed-rate loan, investment market gains and easing inflation.
The biggest quarterly increases in profit margins were in Barnstable, Massachusetts, up from 47% in the first quarter to 69.2% in the second quarter; Fort Wayne, Indiana, up from 46.7% to 65.5%; Augusta, Georgia, up from 45.7% to 64.1%; Rochester, New York, up from 50.9% to 68%; and Charleston, South Carolina, up from 45.3% to 56.7%.
“It’s way too early to predict another long-term price runup, especially since buying a home is a financial stretch for so many households around the country,” Barber said. But the second-quarter numbers clearly show the market has more steam left in it, and sellers are reaping the benefits.”
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