Still-rising home prices fuel Q3 surge in seller profits

With U.S. home prices still on the rise, seller profits jumped during third-quarter 2021 and reached their highest level since the end of the Great Recession.

That’s according to Attom Data Solutions, which reported that profit margins on sales of median-priced single-family homes grew to 47.6% in Q3 2021, up from 42% in the second quarter of this year and up from 34.5% in Q3 2020 to reach the highest profit margin in 10 years.

Return-on-investment (ROI) gains realized in the third quarter marked the largest quarterly jump since 2014 as well as the largest annual growth since at least 2008.

With the nationwide median home price hitting a record $310,500, the typical home sale in Q3 2021 generated $100,178 in profit, also a new all-time high. That’s up from $88,800 in Q2 2021 and up from $69,000 in Q3 2020. Median home prices grew year over year in an astounding 93% of U.S. metro areas with enough data to evaluate while profit margins rose in 86% of these same metros. Month over month, ROI was up in 82% of metros.

“The third quarter of this year marked another period in a banner year for a housing-market boom that’s steaming ahead through its 10th year,” said Todd Teta, chief product officer at Attom Data.

“There have been a couple of small hints of a possible slowdown in recent months as we head into the normally quiet fall and winter seasons. The pandemic also remains a constant presence that could tamp things down. But for now, the market engine seems to have nothing but high-octane gas in the tank.”

The largest year-over-year profit-margin increase was posted in Boise, which saw ROI vault from 61.4% in Q3 2020 to an astounding 130.4% in Q3 2021. Other noteworthy increases were seen in Claremont-Lebanon, New Hampshire (from 41.1% to 93.8%); Augusta, Georgia (19.6% to 56.6%); Raleigh (30.4% to 67%); and Bellingham, Washington (69.5% to 105.6%).

Among large cities, the biggest profit-margin gains occurred in Raleigh, Detroit (43% to 68%), Austin (47.6% to 70.9%) and Pittsburgh (40.1% to 61.9%).

The largest annual decreases in profit margins were in Salem, Oregon (75.6% to 48.3%); Brownsville, Texas (37.1% to 13%); Kansas City, Missouri (43.6% to 25.1%); and San Jose (86.2% to 71%).


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