Home Seller Profits Drop Along With Prices

Home seller profits fell in the third quarter of 2022 as home prices have started to pull back, according to ATTOM Data Solutions U.S. Home Sales Report.

• Q-O-Q: Profit margins on median-priced single-family home and condo sales fell 3 percentage points to 54.6% in the third quarter of 2022.

• Y-O-Y: Profit margins are still up 7.8 percentage points when compared to the third quarter of 2021.

Gross Profit Drop. Gross profits were down 6% on the typical single-family home and condo sale across the country to $120,100, this was the largest quarterly decrease since early 2017.

Biggest Drops. The biggest quarterly profit margin drop was in Claremont-Lebanon, New Hampshire which reported a 20.4 percentage point drop to 52.4% in Q3 followed closely by San Francisco with a 19.7 percentage point drop and Prescott, AZ with a 15.5 percentage point drop.

• The South had two cities in the top five metro areas with at least a million people. Raleigh was number four with a 9.6 percentage point drop to 56% and Birmingham, AL was off 9.2 percentage points to 31.3%

Home Prices. Profit margins are falling thanks to the slight decline in home prices. Nationally, the median home price fell 2.7% to $339,815 in the third quarter but was still up 9.4% compared to the third quarter of 2021.

Homeownership Tenure. While homeownership tenure was up it continues to remain at historically low levels. Homeowners who sold in Q3 had owned their homes for an average of 5.98 years. That was up slight from 5.84 years in Q2, but is still down from 6.28 years in the third quarter of 2021 and is down from the over 7 years average we saw this last decade.

Cash Is King. With mortgage rates spiking, paying cash made sense for more buyers in the third quarter. Nationwide, all-cash purchases accounted for 35.7% of all sales in Q3 which was down slightly from the 36% reported in Q2 but still up 1.8 percentage points from Q3 2021.