ATTOM: 2Q Home Seller Profits Surge
ATTOM, Irvine, Calif., said profit margins on typical home sales hit another record in the second quarter amid the fastest rise in home prices in more than a decade.
The company’s quarterly U.S. Home Sales Report said profit margins on median-priced single-family home and condo sales across the United States hit a record of 55.5 percent. On the heels of a lackluster first quarter that suggested possible weakness in the nation’s long-running housing market boom, the latest typical profit margin was up from 48.3 percent in the first quarter and 42.9 percent a year ago. It was more than 20 points above the 32 percent figure from second quarter 2020.
“Home sellers in the second quarter continued to benefit from the rapid growth in home price appreciation the country has experienced over the past few years,” said Rick Sharga, executive vice president of market intelligence with ATTOM. “While price growth may slow down as higher mortgage rates dampen demand from prospective homebuyers, home sellers should continue to profit from the record $27 trillion in homeowner equity in today’s market.”
ATTOM said while profit margins routinely go up during the spring home-buying season, the latest spike of more than seven percentage points marked the largest quarterly gain since at least 2008. The year-over-year gain of 13 points in the typical return on investment was one of the largest in the past decade.
Gross profits also hit new highs in the second quarter, after dipping slightly in the early months of the year. The typical single-family home and condo sale across the country generated a gross second-quarter profit of $123,869, up 19 percent from $103,750 in the first quarter and up 38 percent from $90,000 a year earlier.
The second-quarter records for gross profits and profit margins came as the national median home price hit a new high of $346,000 in the second quarter– the 10th straight quarterly increase. The latest median value was up 8.8 percent from the first quarter and 15.3 percent a year ago.
The report said typical profit margins – the percent change between median purchase and resale prices – increased from the first quarter to the second quarter in 162 (89 percent) of the 183 metro areas around the U.S. with sufficient data to analyze. They were up annually in 174 of those metros (95 percent). The biggest annual increases in profit margins came in the metro areas of Fort Myers, Fla. (up 90.9 percent); Naples, Fla. (up 83.1 percent); Ocala, Fla. (up 85.2 percent); Gulfport, Miss. (up from a loss of 6.5 percent to a gain of 30.8 percent) and Yuma, Ariz. (up 77.8 percent).
ATTOM said homeowners who sold in the second quarter had owned their homes an average of 5.87 years, up from 5.71 years in the first quarter, but down from 6.31 years a year ago.
Institutional investors nationwide accounted for just 6.2 percent, or one of every 16 single-family home purchases in the second quarter, unchanged from a year ago, but up from 4.4 percent in the first quarter.
Nationwide, buyers using Federal Housing Administration loans comprised only 6.7 percent of all single-family home purchases in the second quarter (one of every 15), the smallest portion since the fourth quarter of 2007. The latest figure was down from 7.3 percent in the previous quarter and from 7.9 percent a year earlier.
“FHA borrowers – and borrowers with VA loans – have been at a significant disadvantage in a housing market characterized by historically short sales cycles and near-record levels of cash buyers,” Sharga said. “If days on market continue to increase, leveling the playing field a little bit for these borrowers, we could see the volume of homes purchased by FHA and VA borrowers climb back up to more normal levels.”
