IRVINE, Calif.— Homeowners earned a 55.6% profit margin on typical single-family home and condo sales in the United States during the third quarter, the real estate analytics company ATTOM said. That figure was down by small amounts both quarterly and annually, dipping by one percentage point from the second quarter of 2024 and two points from the third quarter of last year.
The nationwide investment return ticked downward as home-price spikes that had buoyed the housing market during the Spring of this year flattened out, leaving the U.S. median home value virtually unchanged at about $360,000. While home-seller profits remain historically high, the national margin has declined almost every quarter from a 64% peak hit in 2022.
The leveling off of prices during the third quarter also led to typical raw profits for sellers staying about the same, near an all-time high of just under $130,000.
“The latest price and profit numbers provided another round of generally good news for homeowners, tempered by a bit of a downside,” said Rob Barber, CEO for ATTOM. “Home values remained at or near record levels around large swaths of the country, keeping seller profits far above historical levels. At the same time, though, the housing market settled down after a big second quarter, which extended a slow fallback in profit margins that started last year. If history is a good guide, the fourth quarter is likely to bring more of the same as the peak buying season ends.”
He added that “this is far from a warning sign that the long market boom is ending. But there certainly are forces that could cut either way, especially as affordability remains a challenge for so many potential buyers.”
Profit margins slip quarterly in half of U.S. and annually in three-quarters of nation
Typical profit margins — the percent difference between median purchase and resale prices — stayed the same or decreased from the second quarter of 2024 to the third quarter of 2024 in 79 (50.6%) of the 156 metropolitan statistical areas around the U.S. with sufficient data to analyze. They were down annually in 112, or 71.8%, of those metros, and down in about the same portion since the second quarter of 2022, when the nationwide return on median-priced home sales peaked at 64.3%.
Profit margins have softened over the past year throughout all price segments of the market, from metro areas where home values mostly sit below $250,000 to those where they top $450,000. But the low end of the market has fared a bit better. Typical margins decreased annually in about 60% of the least expensive metro areas compared to about 75% elsewhere.
The biggest year-over-year decreases in typical profit margins during the third quarter of 2024 came in the metro areas of San Francisco, CA (margin down from 84.9% in the third quarter of 2023 to 61.4% in the third quarter of 2024); Punta Gorda, FL (down from 94.1% to 74.4%); Scranton, PA (down from 88.2% to 69.6%); South Bend, IN (down from 77.3% to 59.2% ) and Hilo, HI (down from 86.5% to 70.5%).
Aside from San Francisco, the biggest annual profit-margin decreases in metro areas with a population of at least 1 million in the third quarter of 2024 were in Austin, TX (typical return down from 44.3% to 33.3%); Honolulu, HI (down from 53.9% to 43.3%); Riverside, CA (down from 78.6% to 6%) and Birmingham, AL (down from 52.1% to 42.7%).
The biggest annual improvements in returns on investment came in Trenton, NJ (margin up from 65.5% in the third quarter of 2023 to 87.4% in the third quarter of 2024); Albany, NY (up from 31.8% to 51.6%);Rockford, IL (up from 54.5% to 70.2%); Rochester, NY (up from 66.7% to 81.2%) and Evansville, IN (up from 47.2% to 61.7% ).
Two-thirds of metro markets enjoying investment returns above 50%
Despite the downward trend, returns on investment for median-priced home sales during the third quarter of 2024 still surpassed 50% in 107 of the metro areas analyzed (68.6%). That was down from three quarters of those areas in the third quarter of last year but far above the level of 13% five years ago.
The leaders among areas with a population of at least 1 million in the third quarter of this year were San Jose, CA (typical return of 109.8%); Seattle, WA (90.3%); Providence, RI (84.6%); Miami, FL (83.9%) and Grand Rapids, MI (81.9%).
The lowest among areas with a population of at least 1 million were in New Orleans, LA (24.8%); San Antonio, TX (25.1%); Austin, TX (33.3%); Houston, TX (37.3%) and Dallas, TX (37.4%).
Raw profits remain near record level
The raw profit on median-priced home sales nationwide, measured in dollars, slipped 0.9% during the months running from July through September of this year, to $128,700. But it was still up 2.7% from the third quarter of 2023 and remained near the record of $135,000 hit in 2022.
Typical raw profits were flat or down quarterly in 74, or 47.4%, of the markets analyzed. Despite the nationwide year-over-year gain, raw profits were the same or down annually in 82, or 52.6% of those metro areas.
The biggest year-over-year increases in raw profits on typical sales among metro areas with a population of at least 1 million were in Rochester, NY (up 24.4%); Cleveland, OH (up 23.5%); Providence, RI (up 18.9%); Chicago, IL (up 18.8%) and Cincinnati, OH (up 15%).
Raw profits on median-priced sales exceeded $100,000 during the third quarter in 67.3% of the metro areas analyzed, with 19 of the top 20 along the east or west coasts. They were led by San Jose, CA (raw profit of $785,000); San Francisco, CA ($380,600); San Diego, CA ($377,000); Los Angeles, CA ($376,000) and Barnstable, MA ($361,968).
The 25 lowest raw profits were all in the Midwest or South. The smallest were in Beaumont, TX ($15,481); Lubbock, TX ($29,740); Montgomery. AL ($35,590); Macon, GA ($37,692) and McAllen, TX ($40,312).
National median home value stalls in Summer of 2024, but still at all-time high
Nationwide, the median price of single-family homes and condos rose from the second to the third quarter of 2024 by just 0.2% after spiking 7.4% in the Spring. But it still hit a new record of $360,500, up from $359,900 in the prior three-month period. The latest median was up 5.3% from $342,500 in the third quarter of last year.
The typical value increased quarterly in 52.5% of the metro areas around the country with enough data to analyze and annually in 81.6%. It hit new highs during the third quarter in 50% of those markets.
Metro areas in upper half of the U.S. market, concentrated in the West and South regions, suffered the largest quarterly price declines. About two-thirds of those locations, with typical values of at least $350,000, absorbed losses. Measured annually, the best gains came in low-priced areas, clustered more in the Midwest and Northeast.
Markets with a population of at least 1 million and the biggest quarterly decreases in median home prices were San Francisco, CA (down 11.1% from the second to the third quarter of this year, to $1 million); Austin, TX (down 10.5%, to $425,000); New Orleans, LA (down 6.6%, to $242,900); San Jose, CA (down 6.1%, to $1.5 million) and Indianapolis, IN (down 4.2%, to $263,560).
The largest annual median-price increases in metro areas with a population of at least 1 million were in Rochester, NY (up 11.1% from the third quarter of 2023 to the third quarter of 2024, to $250,000); Providence, RI (up 10.3%, to $480,000); Hartford, CT (up 9.6%, to $367,000); Detroit, MI (up 9.4%, to $255,000) and Cleveland, OH (up 9.4%, to $221,000)
Homeowners staying longer before selling
Homeowners who sold in the third quarter of 2024 had owned their homes an average of 8.09 years. That was up from 7.82 years in the second quarter of 2024 and from 7.74 years in the third quarter of 2023, marking the fifth increase in the last six quarters.
Average tenure was up from the third quarter of 2023 to the same period this year in 82% of metro areas with sufficient data. The largest annual increases were in Peoria, IL (tenure up 15%); Crestview, FL (up 14%); Medford, OR (up 14%); Salinas, CA (up 11%) and Fort Collins, CO (up 10%).
The longest average tenures for owners who sold in the third quarter were again in the Northeast or West regions of the U.S. They were led by Barnstable, MA (13.84 years); Bridgeport, CT (13.23 years); New Haven, CT (12.81 years); Hartford, CT (12.81 years) and San Francisco, CA (12.69 years).
The shortest average tenures among third-quarter sellers were in Provo, UT (6.62 years); Oklahoma City, OK (6.69 years); Lakeland, FL (6.81 years); San Antonio, TX (6.83 years) and Austin, TX (6.87 years).
Lender-owned foreclosures still decreasing
Home sales following foreclosures by banks and other lenders represented just 1.3%, or one of every 78 U.S. single-family home and condo sales in the third quarter of 2024. That was down from 1.4% in both the second quarter of 2024 and the third quarter of last year. The portion continues to represent just a tiny fraction of the 30.1% peak this century hit in 2009 during the aftermath of the Great Recession of 2007.
Among metro areas with sufficient data, those where REO sales represented the largest portion of all sales in the third quarter of 2024 included Honolulu (7.5%); Albany, NY (4.9%); Flint, MI (4.7%); Macon, GA (4.6%) and St. Louis, MO (3.6%).
Cash sales drop as portion of all transactions
Nationwide, all-cash sales accounted for 37.2% of single-family home and condo sales in the third quarter of 2024. That was down from 38.9% in the second quarter of 2024, although up slightly from 36.9% in the third quarter of last year.
Among metropolitan areas with sufficient data, those where all-cash sales represented the largest share of all transactions in the third quarter of 2024 included Myrtle Beach, SC (69% of all sales); Claremont-Lebanon, NH (64.8%); Macon, GA (59.9%); Warner Robins, GA (58.3%) and Hilton Head, SC (58%).
Those where cash sales represented the smallest share of all transactions in the third quarter of 2024 included Greeley, CO (15.7%); Hagerstown, MD (19.6%); Jacksonville, NC (21.6%); Washington, DC (22.2%) and Kennewick, WA (22.3%).
Institutional investment decreases again
Institutional investors nationwide accounted for 6%, or one of every 17 single-family home and condo sales in the third quarter of 2024. That was down from 6.2% in the second quarter of 2024 and from 6.6% in the third quarter of last year.
Among states with enough data to analyze, those with the largest percentages of sales to institutional investors in the third quarter of 2024 included Alabama (9.1% of all sales), Tennessee (8.9%), Oklahoma (8.4%), Georgia (8.2%) and Texas (8.1%).
FHA-financed purchases stay roughly the same
Nationwide, buyers using Federal Housing Administration (FHA) loans comprised 8.4% of all single-family home and condo sales in the third quarter of 2024 (one of every 12). That was about the same as the 8.2% level in second quarter of 2024 and down slightly from 8.7% a year earlier.
Among metropolitan areas with sufficient FHA-buyer data, those with the highest levels of FHA sales in the third quarter of 2024 included Lakeland, FL (24.1% of all sales); Merced, CA (23.5%); Bakersfield, CA (21.7%); Yuma, AZ (20.6%) and Visalia, CA (19.6%).
Source: ATTOM
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