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Home Values Hit All-Time Highs in Q3

ATTOM has released its third-quarter 2023 U.S. Home Sales Report, which revealed that profit margins on median-priced single-family home and condo sales in the United States increased to 59% in Q3—the second straight quarterly increase following several declines.

The improvement in typical profit margins, from 56.6% in Q2 of 2023, came amid a continued rebound in the U.S. housing market that pushed the median nationwide home price up 2% to a new high of $350,000. The nationwide profit margin and median home price have increased since an unusual decline from the middle of 2022 to the early part of 2023 that threatened to reverse a decade-long market boom.

However, even as seller fortunes improved again in Q3, the typical investment return nationwide did remain below the 62% level recorded in Q3 of 2022 and a high point of 62.3% in Q2 of last year.

“Prices and profits around the U.S. got another boost over the summer as the housing market continued recovering from last year’s setbacks,” said Rob Barber, CEO of ATTOM. “Things do remain uncertain heading into the market’s annual fall slowdown, especially at a time when mortgage rates are rising again, home affordability is getting tougher, and the potential for a recession hangs in the air. But the latest gains fell in line with what we often see during the third quarter and showed that any predictions of an extended market fallback may have been premature.”

Gross profits on typical single-family home and condo sales across the country also went up during Q3 of 2023. They rose 5% quarterly to $129,900 and were up 3.2% annually.

As the supply of homes for sale in the U.S. remained historically low, that put upward pressure on prices, which, by extension, helped to push up profits. But mortgage rates started increasing again in the third quarter, rising toward an average of 8% for 30-year fixed loans following a stable second quarter. Consumer-price inflation also ticked back up after dropping dramatically over the prior year from 9% to 3%, while the national unemployment rate rose close to 4%.

Profit margins grow quarterly in roughly half the country but remain down annually

Typical profit margins—the percent difference between median purchase and resale prices—increased from Q2 of 2023 to Q3 of 2023 in 85 (55%) of the 155 metropolitan statistical areas around the U.S. with sufficient data to analyze. However, they were still down annually in 103, or 66%, of those metros, as the recent improvements were not enough to wipe out the earlier losses. That happened as Q3 improvements in home prices outpaced the smaller increases that recent home sellers had been paying when they originally bought their homes. Larger gains at the point of resale translated into higher profit margins.

The biggest quarterly increases in typical profit margins came in:

  • Scranton, PA (margin up from 72.2% in Q2 of 2023 to 92% in Q3 of 2023)
  • Reading, PA (up from 70.3% to 88.5%)
  • Flint, MI (up from 66.7% to 84.6%)
  • Evansville, IN (up from 32.9% to 45.9%)
  • Roanoke, VA (up from 44.4% to 56.3%)

The biggest quarterly profit-margin increases in metro areas with a population of at least 1 million in the third quarter of 2023 were in:

  • Birmingham, AL (return up from 41.2% to 50.9%)
  • Buffalo, NY (up from 73.9% to 82.9%)
  • Rochester, NY (up from 65.4% to 71.9%)
  • Kansas City, MO (up from 44.5% to 50.2%)
  • Tucson, AZ (up from 59.1% to 64.8%)

Overall, typical profit margins decreased quarterly in 45% of the metro areas analyzed.

The biggest quarterly decreases were in:

  • Lake Havasu City, AZ (margin down from 101.7% in Q2 of 2023 to 81.6% in Q3 of 2023)
  • Albany, NY (down from 44.8% to 27.4%)
  • Naples, FL (down from 84.5% to 73.7%)
  • Bakersfield, CA (down from 76.1% to 65.9%)
  • Tallahassee, FL (down from 73.8% to 63.6%)

The largest quarterly decreases in profit margins among metro areas with a population of at least 1 million were in:

  • San Jose, CA (down from 105.4% to 98.1%)
  • Fresno, CA (down from 77.1% to 70.8%)
  • Raleigh, NC (down from 61.9% to 56.3%)
  • San Diego (down from 78.7% to 73.8%)
  • Austin, TX (down from 50.3% to 45.5%)

Raw profits up in almost two-thirds of U.S.

Profits on median-priced home sales nationwide, measured in raw dollars, increased from $123,716 in Q2 of 2023 to $129,900 in Q3, a 5-percent gain. Typical raw profits went up quarterly in 95, or 61%, of the metro areas analyzed. As measured annually, the typical nationwide raw profit was also up by 3.2% from $125,875 in Q3 of 2022. The figure rose year-over-year in 54% of the markets analyzed.

The biggest quarterly raw-profit increases in areas with a population of at least 1 million were in Buffalo, NY (up 22%); New York, NY (up 15%); Birmingham, AL (up 13%); Rochester, NY (up 13%); and Kansas City, MO (up 11%).

On an annual basis, the largest improvements in raw profits on median-priced home sales among metros with a population of at least 1 million came in Hartford, CT (up 33%), Rochester, NY (up 24%), Chicago, IL (up 15%), Cincinnati, OH (up 13%), and Buffalo, NY (up 13%).

Eighteen of the top 20 largest raw profits on median-priced sales in Q3 of 2023 were along the northeast or west coasts. They were led by San Jose, CA (profit of $718,000); San Francisco ($485,000); San Diego ($361.000); Los Angeles ($347,233); and Seattle ($331,938).

Nineteen of the smallest 20 raw profits were in the Midwest or South. The lowest were in Shreveport, LA ($2,744); Beaumont, TX ($24,312); Peoria, IL ($37,500); Lubbock, TX ($44,725); and McAllen, TX ($47,030).

Prices up in almost three-quarters of nation

Median single-family home and condo prices increased from the second to the third quarter of 2023 in 110 (71%) of the 155 metro areas around the country with enough data to analyze and were up annually in 125 of those metros (81%). Nationwide, the median home price rose to a new high of $350,000, up 2% over the previous record of $343,000 in Q2 of 2023 and 6.1% from $329,900 in Q3 of last year.

Metro areas with the biggest increases in median home prices from Q2 of 2023 to Q3 of 2023 were Buffalo, NY (+14.7%); Scranton, PA (+11.4%); Trenton, NJ (+11.1%); New York, NY (+9.9%); and Syracuse, NY (+9.8%).

Aside from Buffalo and New York, the largest quarterly median price increases in metro areas with a population of at least 1 million were in Detroit (+7.8%); Hartford, CT (+6.3%); and Philadelphia (+6.3%).

Home prices tied or hit new highs during Q3 of 2023 in 86 of the 155 metro areas in the report (55%). Metro areas with a population of more than 1 million that set or tied records in Q3 included New York, Chicago, Philadelphia, PA, Miami, and Atlanta.

Metro areas with a population of at least 1 million where the median home price declined most from the second quarter to Q3 of 2023 included New Orleans (down 5.2 percent); Indianapolis (-4.6%); San Francisco (-4.4%); Austin, TX (-4%); and Dallas (-3%).

Cash sales are up 

Nationwide, all-cash purchases accounted for 36.6% of single-family home and condo sales in Q3 of 2023. That was up slightly from 36.4% in Q2 of 2023 and up from 35.2% in Q3 of last year.

“The level of cash sales has inched up over the past year as mortgage rates in the U.S. have continued their march higher, now close to an average of 8 percent for a 30-year loan,” said Barber. “If rates keep rising, that should continue creating favorable conditions for more all-cash deals.”

Among metropolitan areas with a population of 200,000 or more and sufficient cash-sales data, those where cash sales represented the largest share of all transactions in Q3 of 2023 included Athens, GA (63.3%); Myrtle Beach, SC (60% of all sales); Macon, GA (58.9%); Claremont, NH (56.8%); and Naples, FL (56%).

Those where cash sales represented the smallest share of all transactions in Q3 of 2023 included Greeley, CO (16.3%); Boulder, CO (19.7%); Cedar Rapids, IA (21.6%); Washington, DC (21.7%); and Vallejo, CA (21.7%).

To read the full report, including more data, charts, and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].

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