IRVINE, CA — ATTOM’s second-quarter 2024 U.S. Home Sales Report revealed that home sellers earned a 55.8% profit margin on typical single-family home and condo sales. This figure shows a slight increase from the first quarter of 2024 but remains down by one percentage point from the same period last year.
The nationwide investment return remained stable, trailing behind the peak levels of 2022, even as the median U.S. home price surged to a new record of $365,000 during the 2024 Spring home-buying season.
The price increase helped push typical raw profits for sellers back over $130,000, nearing an all-time high. However, it wasn’t enough to significantly boost profit margins. The renewed price surge failed to outpace the higher costs that sellers had incurred when purchasing their homes.
“The second-quarter profit report offers a mixed bag of plusses and minuses that added up to an overall picture of not much change for sellers,” said Rob Barber, CEO of ATTOM. “Prices jumped back upward, which was great news for owners. So did raw profits. Profit margins also remained historically elevated. But the bottom-line profit-margin trend didn’t move much at all because soaring prices are far from a new thing. Even greater price improvements will be needed to kick margins up over the rest of the year.”
Price and Profit Trends
The latest figures show that the national median home value rose by 9% quarterly and 6% annually. These increases came amid the usual Springtime demand among buyers, with mortgage rates stabilizing just below 7% for a 30-year fixed loan and historically tight housing supplies.
Despite the price hikes, investment returns did not see a notable boost. Median values rose by 8% quarterly and 7% annually during the time when homeowners were buying the properties they sold in the second quarter of this year. These similar price patterns largely canceled each other out.
Regional Profit Margin Variations
Profit margins increased from the first quarter of 2024 to the second quarter of 2024 in 94 (58.8%) of the 160 metropolitan statistical areas analyzed. However, they were down annually in 100, or 62.5%, of those metros. About three-quarters of the higher-end housing markets, where home values mostly topped $350,000, saw a decline in typical margins year-over-year.
The metro areas with the largest year-over-year decreases in profit margins were Hilo, HI (down from 80.5% to 45.3%); Port St. Lucie, FL (down from 95% to 73.9%); Daphne-Fairhope, FL (down from 49.8% to 34%); Crestview-Fort Walton Beach, FL (down from 60.7% to 45.1%); and Naples, FL (down from 84.9% to 69.2%).
Among metro areas with a population of at least 1 million, the biggest annual decreases were in Honolulu, HI (down from 51.8% to 38.5%); Austin, TX (down from 50.3% to 40.3%); Nashville, TN (down from 72.9% to 63.3%); Seattle, WA (down from 94.4% to 85%); and San Antonio, TX (down from 34.9% to 27%).
Conversely, the metro areas with the largest annual improvements in returns on investment were Syracuse, NY (up from 51.6% to 71.8%); Rockford, IL (up from 54.8% to 74.5%); Scranton, PA (up from 79.9% to 97.7%); Lansing, MI (up from 50.1% to 62.7%); and Roanoke, VA (up from 45.1% to 56.1%).
For metro areas with a population of at least 1 million, the largest annual increases in profit margins were seen in Rochester, NY (up from 66.2% to 76%); Cleveland, OH (up from 53.5% to 61%); Hartford, CT (up from 65.8% to 73.3%); Chicago, IL (up from 39.5% to 46.1%); and Providence, RI (up from 73.3% to 78.8%).
The report highlights the complexities of the current housing market, where price increases do not always translate into higher profit margins for sellers. As the year progresses, even more substantial price improvements may be necessary to see significant changes in investment returns.
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