Seller Profits Increase Across U.S.
ATTOM, Irvine, Calif., said profit margins on median-priced single-family home and condo sales jumped to 47.6 percent–the highest level since Great Recession ended a decade ago.
In another sign of the U.S. housing market’s strength, the firm’s third-quarter U.S. Home Sales Report said the typical home sale across the country during the third quarter generated just more than $100,000 in profit as the national median home price reached a record $310,500. The latest profit level–also a new high–increased from $88,800 in the second quarter and $69,000 in third-quarter 2020.
Those gains raised the typical return on investment that sellers made on their original purchase price nationwide from 42 percent in the second quarter and 34.5 percent a year ago. The investment-return increases marked the biggest quarterly jump since 2014 and the biggest annual surge since at least 2008, ATTOM said.
“Prices and seller profits again hit new highs since the market started coming back from the Great Recession in 2012,” said Todd Teta, Chief Product Officer with ATTOM. “There have been a couple of small hints of a possible slowdown in recent months as we head into the normally quiet fall and winter seasons. The pandemic also remains a constant presence that could tamp things down. But, for now, the market engine seems to have nothing but high-octane gas in the tank.”
Soaring profits in the third quarter came as the national median home price increased 3.5 percent from the second quarter and 15.9 percent from third-quarter 2020. The annual price surge marked the fifth straight quarter with year-over-year increases exceeding 10 percent.
The report noted the national housing market was so hot in the third quarter median home prices rose annually in 93 percent of U.S. metropolitan areas with enough data to analyze, while profit margins increased in 86 percent.
“The latest price and profit improvements reflect a housing market that kept speeding ahead even as the U.S. economy only gradually recovered from widespread damage caused by the Coronavirus pandemic that hit early last year and continues to pose a threat,” the report said. “Amid rock-bottom interest rates and worries about living in congested virus-prone parts of the country, a glut of buyers has been chasing a tight supply of homes for sale over the past year and a half, raising demand and spiking prices.”
Meanwhile, cash sales reached a six-year high, ATTOM said. Nationwide, all-cash purchases accounted for 34 percent of all single-family house and condo sales in the third quarter, the highest level since early 2015 and up from 21.4 percent in the third quarter of last year.
In addition, institutional investment hit a seven-year high. ATTOM said institutional investors accounted for 7.3 percent of all single-family house and condo purchases in the third quarter, the highest percentage since early 2014. The latest figure was up three-fold from 2.4 percent one year ago.