U.S. home sellers reaped slimmer profit margins on median-priced single-family homes and condominiums during the first quarter of 2024.
In fact, profit margins — the difference between the median purchase and resale prices — slumped to 55.3%, down from 57.1% in the fourth quarter of 2023, according to Attom’s 2024 U.S. Home Sales Report.
It was the smallest level of profit registered in more than two years. Investment returns for sellers fell for the second straight quarter. At the same time, the median nationwide home price dropped by 4.3% on a quarterly basis to $330,000.
“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,” Attom CEO Rob Barber said in a statement.
“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 good news for potential home sellers is that limited housing supply could push home prices higher this spring. But mortgage rates above 7% are harming housing affordability and making the dream of homeownership more elusive for many Americans.
Typical profit margins decreased between Q4 2023 and Q1 2024 in 89 of the 134 (66%) metropolitan statistical areas analyzed by Attom. Profit margins were down annually in 71 (53%) of these metros.
Metro areas featured in the analysis had sufficient data and at least 1,000 single-family home and condo sales in the first quarter of 2024.
The metro areas with the largest year-over-year decreases in profit margins were Lake Havasu City, Arizona; Naples, Florida; Hilo, Hawaii; Crestview-Fort Walton Beach, Florida; and Port St. Lucie, Florida.
Among metro areas with a population of at least 1 million, the biggest profit margin decreases compared to Q1 2023 were in Honolulu; Birmingham, Alabama; Austin; San Antonio; and Salt Lake City.
Meanwhile, profit margins increased annually in 63 of the 134 (47%) metro areas analyzed. Profit margins grew the most in Peoria, Illinois; Scranton, Pennsylvania; Oxnard, California; Rochester, New York; and San Jose. In metro areas with a population of at least 1 million, the highest growth occurred in San Diego; Tucson, Arizona; and New York City.