Home sale profit margins remained high but did fall in the second quarter of 2021, according to ATTOM Data Solutions second quarter 2021 U.S. Home Sales Report… (ATTOM)
- Q-O-Q: The profit margin on the median-priced house or condominium fell from 48.4% in Q1 to 44.9% in Q2.
- Y-O-Y: Proft Margins were 13 points higher then the 32% level recorded a year earlier.
GOOD NEWS: Even though profit margins fell profits are still up for the typical single-family home and condo sale. Profit’s increased 5% from Q1 to $94,500 and they skyrocketed 56% from the same time a year ago. Why? Because home prices are up significantly in 97% of metropolitan areas as the median home price hit $305,000. This was up 10.8% in the first quarter of 2021 and was 22% higher than the second quarter of last year.
- So why are profit margins down? Because price gains were smaller than increases that recent sellers had been paying when they originally bought their homes.
Todd Teta, chief product officer at ATTOM, said the drop in profit margins was odd for springtime and could be a sign things are beginning to cool…
- “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…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.”
CASH IS KING: All-cash purchases accounted for 34% of home sales which is the highest level since the first quarter of 2015.
NOTE: Institutional investors have gotten a lot of media attention recently. Some have blamed them for the skyrocketing home prices. While their purchases are up, they are still a small number of overall sales…
- Institutional investors accounted for 4.6% of all single-family house and condo purchases which is the highest level since the fourth quarter of 2015. This is an increase of 3.2% from Q1 and a 2% increase from a year ago.