Profit margins on sales of median-priced single-family homes and condominiums fell to 54.6% as home prices fell for the first time in nearly three years, according to a new report from ATTOM released this week.
ATTOM’s Third Quarter 2022 U.S. Home Sales Report found that the decline in typical profit margins, of 57.6% in the second quarter of 2022, occurred as the national median home value fell 3% per quarter, to about $340,000. However, the report also found that typical investment returns for home sellers remained up from 48.8% in the third quarter of 2021 and were still at near-record highs for this century – some 20 points. more than just two years earlier.
Highlights:
- Gross profits fell 6% on the sale of typical single-family homes and condos across the country to $120,100, the biggest drop since the start of 2017.
- Typical profit margins declined in 127 of 186 U.S. metropolitan statistical areas. Yields fell by at least three percentage points in about half of these metropolitan areas, although yields still rose each year in 145 of them.
- The largest quarterly declines in typical profit margins occurred in the metropolitan areas of Claremont-Lebanon, New Hampshire (from 72.8% to 52.4%); San Francisco, California (from 85.1% to 65.4%); Prescott, Arizona (from 86.3% to 70.8%); Barnstable, Massachusetts (from 74.5% to 59.6%) and Trenton, New Jersey (from 74.5% to 61%).
- Typical profit margins increased quarterly in only 59 of 186 metropolitan areas. The largest quarterly increases were recorded in Macon, Georgia (from 44.7% to 82.4%); Rockford, Illinois (from 29.9% to 41.8%); Davenport, Iowa (from 29.2% to 40%); Akron, Ohio (from 52.8% to 60.3%) and Hilo, Hawaii (from 103.3% to 110.9%).
- Median home prices in the third quarter of 2022 fell from the previous quarter or remained the same in 98 of the 186 metro areas with enough data to analyze, although they still increased each year in 180 of these metros. Nationally, the median price of $339,815 in Q3 was down 2.7% from $349,266 in Q2, but still up 9.4% from $310,500 a year last.
- The largest declines in median home prices were seen in San Francisco, CA (-13%); Charleston, North Carolina (-12.8%); Crestview-Fort Walton Beach, Florida (-11.3%); San Jose, California (-8.3%) and Naples, Florida (-8.2%).
- Median price increases were seen in Trenton, NJ (+14.6%); Albany, New York (+8.7%); New York, New York (+7.5%); Wichita, Kansas (+7.1%) and Philadelphia, Pennsylvania (+6.7%).
- Buyers using Federal Housing Administration (FHA) loans accounted for 7.9% of all single-family home purchases in Q3 2022. That was up from 6.7% in Q2 2022, the first quarterly gain in one year, but it still remained down from 8.2% per year. year earlier.
- Metro areas with the highest levels of FHA buyers include Bakersfield, CA (20.8%); Visalia, Calif. (19.6%); Modesto, California (17.9%); Hagerstown, Maryland (17.3%) and Vallejo, California (16.9%).
Main takeaways:
“Rapidly rising mortgage rates not only led to lower home sales, but also began to impact home prices,” said Rick Sharga, executive vice president of market intelligence at ATTOM. . “With the highest rates in over 20 years, homebuyers are facing serious affordability issues, with monthly payments in some markets up 50% year over year. It is very likely that house prices will continue to weaken in many markets over the coming months.
Sharga added: “If the Federal Reserve’s goal was to slow the housing market, it has succeeded spectacularly. The market has gone from double-digit annual home price appreciation to less than 3% and falling prices quarter over quarter. But the impact of 6% and 7% mortgage rates means many homes are still out of reach for potential buyers, even with prices falling slightly.
For the full report, which also includes data on occupancy patterns, REO sales, cash sales and institutional investments, Click here.
