Softening home prices led typical home seller profits to dip to their lowest level in five years during the first quarter, according to newly released data from real estate analytics firm Attom.

Following a recent peak of 63.5% in the second quarter of 2022, the typical home sale generated a profit margin of 44.1% through the first three months of 2026.

First-quarter profit margins reflect a decline from 47.2% in the fourth quarter of 2025 and 50.2% a year ago, and represent the lowest profit margin since the first quarter of 2021. Attom reported home prices were flat nationwide in the first quarter but up 3% over the year.

Rob Barber, CEO of Attom, remarked in a statement accompanying the quarterly report released Thursday that “prices appear to be leveling out,” a trend supported toward the end of the first quarter by rising mortgage rates.

Mortgage borrowing costs consistently declined through January and February, until a global energy and trade shock precipitated by the start of the war in Iran on Feb. 28 pushed typical mortgage rates on 30-year fixed-rate home loans back to 6.5%. Mortgage rates hovered in the high-5% range during the middle of February.

“The profit margins sellers enjoyed over the last few years, which were consistently over 50%, were unusual,” explained Barber. “But even with the most recent dip, margins are still well above the 30% return on investment sellers were seeing before the pandemic.”

Declining home seller profit margins are part of a basket of market shifts in response to the homebuying and refinancing frenzy of 2020, 2021 and 2022. High home prices, elevated borrowing costs, a lack of inventory and spiking property tax and insurance costs kept the annual pace of home sales near three-decade lows in 2023, 2024 and 2025.

Meanwhile, the aftereffects of the Federal Reserve dropping the effective federal funds rate to nearly 0% for a two-year period from April 2020 to April 2022 has left a large cohort of existing homeowners locked into ultra-low-rate mortgages, limiting mobility and new for-sale inventory.

Just over half of existing mortgage holders had rates below 4% as of February, according to ICE Mortgage Technology. The average mortgage rate on outstanding loans at the end of 2025 was 4.4%, roughly 2% lower than market rates in March, according to the National Mortgage Database managed by the Federal Housing Finance Agency.

Attom reported that the average time between a home’s most recent sale date and the previous sale date was 8.44 years in the first quarter, marginally lower than the 8.46 years for homes sold in the fourth quarter. Homeownership tenure has remained above eight years since late 2024, and above seven years since 2015, though it hovered around four years from 2000 to 2010.

The share of all-cash transactions fell to 41.7% from 42.4% a year ago as the share of purchases made by institutional investors — those who purchase 10 or more homes in a calendar year, by Attom’s definition — fell to 6.6% from 6.8% a year ago.

Attom’s first-quarter home sales report also noted that the share of homes sold by banks or lenders rose to 1.6% in the first quarter from 1.3% in the fourth quarter and 1.5% a year ago. The company recently reported that lender repossessions or real estate owned (REO) transactions on foreclosed properties jumped 45% from a year ago in the first quarter.