Profit margins for homesellers took an unusual dip in the second quarter, according to ATTOM’s second-quarter 2021 U.S. Home Sales Report. However, the report showed numbers that were far above where were they were a year ago.
The typical single-family house and condo sold in the second quarter generated a profit of $94,500, up from $90,000 in the first quarter and from $60,572 year-over-year, according to the report. However, the profit margin on the median-priced home declined from 48.4 percent in the first quarter to 44.9 percent in the second quarter.
While the margin remained 13 points above the 32 percent level from a year earlier, the drop-off marked a rare decline during a time of year that usually produces some of the best returns for sellers. The last time typical returns on investment dropped nationally during a second quarter period was in 2008.
“Prices and profits from the second quarter painted yet another picture of a housing market in high gear – except for one thing. Profit margins dropped in the second quarter, which is very unusual for any springtime period because that’s when the housing market is usually hottest or close to it,” ATTOM Chief Product Officer Todd Teta said in a release. “While it may just be a momentary thing in today’s volatile market, it’s definitely something to keep an eye on in case it’s a sign that the market is finally cooling or giving in to some of the economic forces connected to the virus pandemic.”
The mixed picture of high, but reduced, profit margins came as the national median home price hit yet another record in the second quarter, reaching $305,000. That was up 11 percent from $275,200 in the first quarter and 22 percent from $250,000 a year ago.
The biggest annual increases in profit margins came in Boise City, Idaho, (margin up from 59.6 percent a year ago to 124.3 percent in the second quarter); Charlottesville, Va., (up from 20.2 percent to 83.6 percent); Scranton, Pa., (up from 34.9 percent to 80.9 percent); Claremont-Lebanon, N.H., (up from 18 percent to 57.3 percent) and Bellingham, Wash., (up from 60.8 percent to 98 percent).
Profit margins dropped year-over-year in 37 of the 195 metro areas analyzed but declined quarterly in 86. The biggest annual decreases were in San Jose, Calif., (margin down from 85.6 percent a year ago to 67.4 percent in the second quarter); Las Vegas (down from 45.8 percent to 30.5 percent); Kansas City, Mo. (down from 41.4 percent to 26.5 percent); Myrtle Beach, S.C., (down from 26.6 percent to 11.7 percent) and Los Angeles (down from 55.7 percent to 41.3 percent).