Profit Margins on Typical Home Sales
Nationwide Decrease to 55 Percent; Returns Slip Downward as
Median U.S. Home Price Slumps 4 percent;
IRVINE,
Calif., April 25, 2024 /PRNewswire/ -- ATTOM, a
leading curator of land, property, and real estate
data, today released its first-quarter 2024 U.S. Home Sales
Report, which shows that profit margins on median-priced
single-family home and condo sales in the
United States decreased to 55.3 percent in the first quarter
– the smallest level in more than two years.
The decline in typical profit margins, from 57.1 percent in the
fourth quarter of 2023 and from 56.5 percent a year ago, came as
the median nationwide home price went down quarterly by 4.3
percent, to $330,000.
While prices often fall back during the slower Winter
home-selling season each year, the latest decrease marked one of
the largest quarterly declines over the past 10 years. At the same
time, investment returns for sellers decreased for the second
straight quarter after several increases last year, hitting the low
point since mid-2021.
Still, even as seller returns slipped, they remained higher than
during most of the housing market boom that has continued
throughout the nation over the past decade. The same was true in
the early months of 2024 for the typical $120,500 gross profit on typical home sales
across the country.
"The latest price and profit numbers show notably downward
trends, which raises new questions about whether the housing-market
boom is indeed ebbing, or even ending, after so many years of
improvement," said Rob Barber, CEO
for ATTOM. "But due caution is needed in looking at the
first-quarter data and what the patterns mean. We saw a similar
downward pattern from late 2022 into early 2023, and then the
market surged. Plus, profits and profit margins still are very high
by historical measures. Amid all that, the Spring buying season
will be a huge barometer for whether the market still has steam in
its engine."
The drop-off in prices and profits comes as a mix of powerful
forces is putting both upward and downward pressure on the U.S.
housing market.
On the upside, historically low supplies of homes could push
prices higher this Spring as buyers compete for a relatively small
stock of properties for sale. The recent surge in the stock market
also helps by providing more resources for down payments. At the
same time, though, mortgage rates have crept back above 7 percent
for a 30-year fixed loan and inflation remains near 4 percent.
Those factors are pushing up ownership costs during a time when
home affordability already is a stretch for average workers across
the country, according to a separate ATTOM analysis.
Profit margins decline quarterly and annually in more than
half the country
Typical profit margins – the percent
difference between median purchase and resale prices – decreased
from the fourth quarter of 2023 to the first quarter of 2024 in 89
(66 percent) of the 134 metropolitan statistical areas around the
U.S. with sufficient data to analyze. They also were down annually
in 71, or 53 percent, of those metros.
That happened as median first-quarter home prices declined more,
or went up less, compared to changes that recent sellers were
seeing when they originally bought their homes. Those trends, from
the point of purchase to the point of resale, translated into lower
profit margins in a majority of the country.
Metro areas were included if they had sufficient data and at
least 1,000 single-family home and condo sales in the first quarter
of 2024.
The biggest year-over-year decreases in typical profit margins
came in the metro areas of Lake Havasu
City, AZ (margin down from 102.4 percent in the first
quarter of 2023 to 76.3 percent in the first quarter of 2024);
Naples, FL (down from 88.4 percent
to 62.9 percent); Hilo, HI (down
from 82.3 percent to 57.8 percent); Crestview-Fort
Walton Beach, FL (down from 68 percent to 47.3 percent) and
Port St. Luce, FL (down from 92.8
percent to 72.3 percent).
The biggest annual profit-margin decreases in metro areas with a
population of at least 1 million in the first quarter of 2024 were
in Honolulu, HI (return down from
57.2 percent to 41.3 percent); Birmingham, AL (down from 36.5 percent to 21.7
percent); Austin, TX (down from
49.3 percent to 37.5 percent); San
Antonio, TX (down from 35 percent to 25.7 percent) and
Salt Lake City, UT (down from 50.7
percent to 42.2 percent).
Typical profit margins increased annually in 63 of the 134 metro
areas analyzed (47 percent). The biggest annual improvements were
in Peoria, IL (margin up from 32.6
percent in the first quarter of 2023 to 52.8 percent in the first
quarter of 2024); Scranton, PA (up
from 88.1 percent to 106.5 percent); Oxnard, CA (up from 55.1 percent to 71.2
percent); Rochester, NY (up from
50.4 percent to 65.2 percent) and San
Jose, CA (up from 85.8 percent to 100 percent).
Aside from Rochester and
San Jose, the largest annual
increases in profit margins among metro areas with a population of
at least 1 million came in San Diego,
CA (up from 65.3 percent to 73.8 percent); Tucson, AZ (up from 49.8 percent to 57.4
percent) and New York, NY (up from
55.7 percent to 62.7 percent).
Prices down quarterly in most of nation although still up
annually
Nationwide, the median price of single-family homes
and condos declined quarterly to $330,000, down from $345,000 in the fourth quarter of 2023 (a record
hit several times over the past two years). The typical home sale
decreased quarterly in 112 (84 percent) of the 134 metro areas
around the country with enough data to analyze,
However, latest median prices remained 3.1 percent higher than
the $320,000 level in the first
quarter of 2023, rising annually in 103 of the metros reviewed (77
percent).
Metro areas with the biggest decreases in median home prices
from the fourth quarter of 2023 to the first quarter of 2024 were
Pittsburgh, PA (down 11.5
percent); Flint, MI (down 10.7
percent); Memphis, TN (down 10.7
percent); Birmingham, AL (down
10.2 percent) and Montgomery, AL
(down 9.7 percent).
Aside from Pittsburgh,
Memphis and Birmingham, the largest quarterly median-price
decreases in metro areas with a population of at least 1 million
were in St. Louis, MO (down 8.1
percent) and Indianapolis, IN
(down 7.4 percent).
Metro areas with a population of at least 1 million where the
median home price remained up most from the first quarter of last
year to the same period this year were Rochester, NY (up 13.2 percent); Hartford, CT (up 12.2 percent); Cincinnati, OH (up 8.9 percent); Providence, RI (up 8.8 percent) and
San Jose, CA (up 8.5 percent).
Historical Median Home Sales Prices
Homeownership tenure down slightly
Homeowners who sold
in the first quarter of 2024 had owned their homes an average of
7.77 years. That was down from 7.88 years in the fourth quarter of
2023, but up from 7.44 years in the first quarter of 2023.
Average tenure was up from the first quarter of 2023 to the same
period this year in 73 percent of metro areas with sufficient data.
The largest annual increases were in Redding, CA (tenure up 23 percent);
Santa Cruz, CA (up 17 percent);
Yakima, WA (up 13 percent);
Oxnard, CA (up 13 percent) and
Jacksonville, FL (up 13
percent).
The longest 40 average tenures among sellers in the first
quarter of 2024 were again in the Northeast or West regions of the
U.S. They were led by Barnstable,
MA (13.2 years); New Haven,
CT (13.06 years); Bridgeport,
CT (12.99 years); Santa Cruz,
CA (12.94 years) and Oxnard,
CA (12.36 years).
Average U.S. Homeownership Tenure
The smallest average tenures among first-quarter sellers were in
Provo, UT (6.33 years);
Panama City, FL (6.57 years);
Austin, TX (6.59 years);
San Antonio, TX (6.6 years) and
Chattanooga, TN (6.61 years).
Lender-owned foreclosures inch upward but remain
low
Home sales following foreclosures by banks and other
lenders represented just 1.7 percent, or one of every 59 U.S.
single-family home and condo sales in the first quarter of 2024.
That was up from 1.5 percent in the fourth quarter of 2023, but
unchanged from 1.7 percent in the first quarter of last year. The
latest figure remained just a tiny fraction of the 30.1 percent
peak this century hit in early 2009 during the aftermath of the
Great Recession of 2007.
Among metropolitan statistical areas with a population of
200,000 or more and sufficient data to analyze, those areas where
REO sales represented the largest portion of all sales in the first
quarter of 2024 included Peoria,
IL (9.6 percent, or one in 10 sales); Davenport, IA (7.7 percent); Warner Robins, GA (6.2 percent); Macon, GA (5.9 percent) and Baton Rouge, LA (5.3 percent).
Cash sales show small increase
Nationwide, all-cash
purchases accounted for 41.1 percent of single-family home and
condo sales in the first quarter of 2024. That was up slightly from
40.7 percent in the fourth quarter of 2023 and from 39.7 percent in
the first quarter of last year.
"Cash-sale levels barely moved in the early months of 2024, but
the portion could easily rise given the recent increase in mortgage
rates," Barber said. "Higher rates mean higher costs, which
provides more incentive for buyers who can afford it to forego
mortgages in favor of all-cash deals."
Among metropolitan statistical areas with a population of
200,000 or more and sufficient data to analyze, those where cash
sales represented the largest share of all transactions in the
first quarter of 2024 included Birmingham, AL (70.1 percent of all sales);
Claremont-Lebanon, NH (69.8 percent); Macon, GA (64.7 percent); Naples, FL (63.7 percent) and Youngstown, OH (61.7 percent).
Those where cash sales represented the smallest share of all
transactions in the first quarter of 2024 included Greeley, CO (14 percent); Charleston, WV (20 percent); Bremerton, WA (21.4 percent); Boulder, CO (22.2 percent) and Cedar Rapids, IA (23 percent).
Institutional investment unchanged
Institutional
investors nationwide accounted for 6.2 percent, or one of every 16
single-family home and condo purchases in the first quarter of
2024. That was unchanged from the fourth quarter of 2023, although
slightly down from 6.4 percent in the first quarter of last
year.
Among states with enough data to analyze, those with the largest
percentages of sales to institutional investors in the first
quarter of 2024 included Tennessee
(9.4 percent of all sales), Alabama (9.2 percent), Indiana (8.7 percent), Kansas (8.5 percent) and Oklahoma (8.4 percent).
States with the smallest levels of sales to institutional
investors in the first quarter of 2024 included Rhode Island (2.5 percent), New Hampshire (2.9 percent), Maine (2.9 percent), Massachusetts (3.6 percent) and New York (3.6 percent).
Historical Home Sales by Type
FHA-financed purchases also remain at same
level
Nationwide, buyers using Federal Housing
Administration (FHA) loans comprised 8.7 percent of
all single-family home and condo purchases in the first quarter of
2024 (one of every 11). That was the same portion as in fourth
quarter of 2023 although up a small amount from 8.3 percent a year
earlier.
Among metropolitan statistical areas with a population of
200,000 or more and sufficient data to analyze, those with the
highest levels of sales to FHA purchasers in the first quarter of
2024 included Merced, CA (25.6
percent of all sales); Bakersfield,
CA (22.5 percent); Lakeland,
FL (22.2 percent); Visalia,
CA (21.3 percent) and Charleston,
WV (18.9 percent).
Report methodology
The ATTOM U.S. Home Sales Report
provides percentages of REO sales and all sales that are sold to
institutional investors and cash buyers, at the state and
metropolitan statistical area. Data is also available at the county
and zip code level, upon request. The data is derived from recorded
sales deeds, foreclosure filings and loan data. Statistics for
previous quarters are revised when each new report is issued as
more deed data becomes available.
Definitions
All-cash purchase: sale where no
loan is recorded at the time of sale and where ATTOM has coverage
of loan data.
Homeownership tenure: for a given market and given
quarter, the average time between the most recent sale date and the
previous sale date, expressed in years.
Home seller price gains: the difference between the
median sales price of homes in a given market in a given quarter
and the median sales price of the previous sale of those same
homes, expressed both in a dollar amount and as a percentage of the
previous median sales price.
Institutional investor purchases: residential property
sales to non-lending entities that purchased at least 10 properties
in a calendar year.
REO sale: a sale of a property that occurs while the
property is actively bank owned (REO).
About ATTOM
ATTOM provides premium
property data to power products that improve transparency,
innovation, efficiency, and disruption in a data-driven
economy. ATTOM multi-sources property tax, deed,
mortgage, foreclosure, environmental risk, natural hazard,
and neighborhood data for more than 155 million
U.S. residential and commercial properties covering 99
percent of the nation's population. A rigorous data management
process involving more than 20 steps validates, standardizes, and
enhances the real estate data collected by
ATTOM, assigning each property record with a persistent,
unique ID — the ATTOM ID. The 30TB ATTOM
Data Warehouse fuels innovation in many industries including
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through flexible data delivery solutions that include ATTOM
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navigator and more. Also, introducing our newest innovative
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Solutions.
Media Contact:
Megan
Hunt
Megan.hunt@attomdata.com
Data and Report Licensing:
949.502.8313
datareports@attomdata.com
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