Home sellers were winners this spring despite headwinds

Home sellers enjoyed near decade-high profit margins this spring as borrowers faced some of the worst affordability in almost 40 years. 

Single-family and condominium profit margins were 47.7% in the second quarter, according to Attom, which released its latest U.S. Home Sales Report Thursday. That percentage was up from the 43.9% margin in the January-to-March period. It was also the first gain after three straight quarters of profit-margin declines. 

"The second-quarter numbers clearly show the market has more steam left in it, and sellers are reaping the benefits," said Attom CEO Rob Barber in a press release.

The real estate data intelligence provider defines profit margins as the percent difference between the median purchase and resale prices. The inventory crunch, rising home prices and mortgage rates which stabilized around 6.5% this spring contributed to the gains, Attom said. The company found the median nationwide home price up 10% quarter-over-quarter to $350,000. 

The good news for sellers came at the expense of buyers, who are still showing a diminished appetite for home loans. June was the second-worst month for affordability in 37 years, Black Knight reported earlier this month. 

Profit margins still didn't reach the heights of last spring, when the typical investment return was 53.2%, Attom said. Gross profits this spring were $113,000, up 17%, or $96,573 from the end of March. The gains this past quarter were down 5% annually. 

Home prices were up on a quarterly basis in over 90% of the nation's markets, according to Attom. The median price rose 10.4% from the first quarter's $317,000 mark, but still far behind the record $341,750 last spring during the market's most recent high point. The findings coincide with other market reports showing overall property value gains but dips in certain markets. 

Metros in the Midwest, South and East Coast saw the largest increase in median home prices from the first quarter. The fastest-growing home prices in the spring were in Rochester, New York, where they jumped 20%. 

Profit margins grew in the majority of the 156 metropolitan statistical areas Attom analyzed. Sellers in the Cape Cod town of Barnstable, Massachusetts saw the greatest profit margin increase, from 47% in the first quarter to 69.2% ending in June. Meanwhile, sellers in larger pandemic-era hotspots like Las Vegas, Phoenix and Salt Lake City saw fading profits quarter-over-quarter. 

All-cash purchases, a popular option for homebuyers during the competitive market of years past, were down this spring 39% from the end of March. Buyers paid cash in 35.9% of all single-family and condo sales this spring, relatively unchanged from the same time last year, Attom found. Cash purchases were most popular in Hudson, New York (69.6%), while least popular in Vallejo, California (19%) and in municipalities around the Washington, D.C. metropolitan area. 

Investors, far removed from a massive spending spree, accounted for 1 of every 16 single-family and condo purchases in the second quarter, Attom said.