Profit margins on median-priced single-family home and condo sales during the first quarter of this year were down by 44.2%, according to new data from ATTOM. This marked the third straight quarterly decrease nationwide and resulted in the lowest investment return since mid-2021.
The decline came as the national median home price inched up by a scant 1% during the first quarter to $321,135, with home values going into decline in almost three-quarters of the nation’s major housing markets. And while the typical investment return nationwide was high in the first quarter – almost double where it stood four years ago – the margin was off by 12 points from the peak of 56.1% recorded in the second quarter of 2022.
“Homeowners are starting to take a significant hit in the form of lost profits from the recent market slowdown,” said ATTOM CEO Rob Barber. “It is possible that the upcoming peak buying season of 2023 could lead to increased profits, owing to favorable mortgage rates and other factors. Over the next few months, we can expect to gain more clarity regarding whether the current market stagnation is a short-term aberration or a more significant trend.”
ATTOM also noted that the homeowners who sold in the first quarter had owned their homes an average of 5.59 years, down from 5.81 years in the fourth quarter of 2022 and 5.68 years in the first quarter of 2022, to the lowest point since mid-2011. If there was a bright spot in the data, it would involve home sales following foreclosures – that represented only 1.7% percent of all first quarter sales, a slight bump up from the 1.2% from one year earlier but a far cry from the 30% peak in 2009 following the Great Recession.