ATTOM released its Q2 2022 U.S. Home Sales Report, revealing that profit margins on median-priced single-family home and condo sales across the United States hit another new record of 55.5%, following the largest quarterly gain in a decade.
On the heels of a dull Q1, that suggested possible weakness in the nation's long-running housing market boom, the latest typical profit margin was up from 48.3% in Q1 of 2022, and 42.9% in Q2 of 2021. It was more than 20 points above the 32% figure from Q2 of 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 at 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.
"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 Q2 of 2002, 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% from $103,750 in Q1 of 2022 and up 38% 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 of 2022 –the 10th straight quarterly increase. The latest median value was up 8.8% from Q1 of 2022 and 15.3% from Q2 of 2021.
The second quarter profit figures showed how strong the nation's housing market prices remained despite rising economic uncertainty and home-mortgage rates that have surged this year. Average mortgage rates have nearly doubled from a year ago, reaching almost 6 percent for a 30-year fixed rate loan, making affordability a challenge for many potential homebuyers.
These higher rates, coupled with rising home prices, the highest U.S. inflation rates in 40 years, and soaring food and fuel prices are all headwinds threatening to slow down what has been a white-hot housing market over the past few years. Still, home prices and seller profits surged anew in the second quarter, after a first quarter that saw a rare dip in investment returns.
Typical profit margins increased from Q1 of 2022 to Q2 of 2022 in 162 (89%) of the 183 metro areas around the U.S. with sufficient data to analyze. They were up annually in 174 of those metros (95%). Metro areas were included if they had at least 1,000 single-family home and condo sales in Q2of 2022 and a population of at least 200,000.
The biggest annual increases in profit margins came in the metro areas of:
- Fort Myers, Florida (margin up from 47.1% in Q2 of 2021 to 90.9% in Q2 of 2022)
- Naples, Florida (up from 40.4% to 83.1%)
- Ocala, Florida (up from 44.4% to 85.2%)
- Gulfport, Mississippi (up from a loss of 6.5% to a gain of 30.8%)
- Yuma, Arizona (up from 42.7% to 77.8)
The biggest annual profit-margin increases in metro areas with a population of at least 1 million in the second quarter of 2022 were:
- Orlando, Florida (margin up from 36.4% to 67.6%)
- Tampa, Florida (up from 47.4% to 76.3%)
- Miami, Florida (up from 38.9% to 66.8%)
- Cleveland, Ohio (up from 21.4% to 42.1%)
- Jacksonville, Florida (up from 43.4% to 63.4)
Profit margins decreased annually in just 20 of the 183 metro areas analyzed –or 11%– and annually in only nine metro areas at 5%. The biggest annual decreases were in:
- Salem, Oregon (margin down from 87.5% in Q2 of 2021 to 55% in Q2 of 2022)
- Hilo, Hawaii (down from 140.8% to 110.5%)
- Boise, Idaho (down from 122.8% to 100.1%)
- Salisbury, Maryland (down from 57.1% to 48.6%)
- Albany, New York (down from 35.4% to 28.3%)
The largest annual decreases, or smallest gains, in profit margins among metro areas with a population of at least 1 million were in:
- Atlanta, Georgia (down from 48.9% to 42.8%)
- Sacramento, California (up from 61.5% to 62.5%)
- San Francisco, California (up from 81.5% to 83.1%)
- Washington, D.C. (up from 44.9% to 46.7%)
- Boston, Massachusetts (up from 49.8% to 52.9%)
Median home prices in Q2 of 2022 exceeded values from the prior quarter 96% of the 183 metropolitan statistical areas with enough data to analyze, and were up annually in 180 of those metros –also at 96%. Nationally, the median price of $346,000 in Q2 was up from $318,000 in Q1 of 2022, and $300,000 in Q2 of last year.
Florida metros topped 4 of 5 spots on the list of the biggest annual increases seen in median home prices during Q2 of 2022. The metros listed were in:
- Gulfport, Mississippi (+55.3%)
- Naples, Florida (+36%)
- Lakeland, Florida (+35.7%)
- Fort Myers, Florida (+31.7%)
- Port St. Lucie, Florida (+29.8%)
The largest annual increases in metro areas with a population of at least 1 million in Q2 of 2022 were in:
- Tampa, Florida (+29.3%)
- Orlando, Florida (+25.5%)
- Phoenix, Arizona (+25.3%)
- Nashville, Tennessee (+24.3%)
- Charlotte, North Carolina (+24.2%)
Home prices in Q2 of 2022 hit or tied all-time highs in 168% of the 183 metro areas in the report, including New York, New York; followed by Los Angeles, Chicago, Dallas, and Houston.
Homeowners who sold in Q2 of 2022 had owned their homes an average of 5.87 years. That was up from 5.71 years in Q1 of 2022, but down from 6.31 years in Q2 of 2021. The latest figure was the second-shortest average time between purchase and resale since Q1 of 2012.
Tenure decreased from Q2of 2021 to the same period this year in 88% of metro areas with sufficient data. They were led by Lakeland, Florida (tenure down 61%); Salem, Oregon (down 51%); Yakima, Washington (down 30%); Provo, Utah (down 27%) and Eugene, Oregon (down 24%).
Twenty of the 25 longest average tenures among sellers in Q2 of 2022 were in the Northeast or West regions. They were led by Bellingham, Washington (9.6 years); Manchester, New Hampshire (9.13 years); Honolulu, Hawaii (7.82 years); Bridgeport, Connecticut (7.76 years) and New Haven, Connecticut (7.52 years).
The smallest average tenures among second-quarter sellers were in Lakeland, Florida (1.25 years); Memphis (3.51 years); Tucson, Arizona (3.79 years); Knoxville, Tennessee (4.28 years); and Cleveland (4.33 years).
Home sales following foreclosures by banks and other lenders represented just 1% of all U.S. single-family home and condo sales in Q2 of 2022 –the lowest portion since at least the first quarter of 2000.
The latest portion of REO sales was down from 1.1% in Q1 of 2022, and 1.5% in Q2 of 2021. REO sales represented only one of every 96 sales in Q2 of 2022, a rate that was less than 1/30th of this century's high point of one in three in Q1 of 2009.
Among metropolitan statistical areas with a population of at least 200,000 and sufficient data, those areas where REO sales represented the largest portion of all sales in Q2 of 2022 included New Haven, Connecticut (2.7% or one in 37 sales); Chicago (2.7%); Syracuse, New York (2.7%), Mobile, Alabama (2.5%) and St. Louis, Missouri (2.3%).
Nationwide, all-cash purchases accounted for 35.4% of all single-family home and condo sales in Q2 of 2022, the highest level since the first quarter of 2014. The second-quarter-of-2022 number was up from 34.6% in Q1 of 2022, and from 31% in Q2 of last year.
"Cash buyers have continued to account for a higher percentage of home sales than usual, probably due in part to homeowners selling properties in high cost states and using the proceeds to buy a home with cash in lower cost areas," said Sharga. "With mortgage rates almost doubling over the past year and the cost of financing soaring, cash buyers will be in an even stronger position of competitive advantage for the foreseeable future,"
Among metropolitan areas with a population of at least 200,000 and sufficient cash-sales data, those where cash sales represented the largest share all transactions in Q2 of 2022 included:
- Naples, Florida (57.2%)
- Utica, New York (52.7%)
- Youngstown, Ohio (52.6%)
- Atlanta, Georgia (51.3%)
- Salisbury, Maryland (51%)
Those where cash sales represented the smallest share of all transactions in the second quarter of 2022 included:
- Gainesville, Georgia (5.1%)
- Athens, Georgia (14.4%)
- Lincoln, New England (16.2%)
- San Jose, California (18%)
- Des Moines, Iowa (18.1%)
Nationwide, buyers using Federal Housing Administration (FHA) loans comprised only 6.7% of all single-family home purchases in Q2 of 2022 –or one of every 15– the smallest portion since Q4 of 2007. The latest figure was down from 7.3% in the previous quarter, and from 7.9% 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," said Sharga. "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."
To read the full report, including more statistics and methodology, click here.