Profits from home sales remain high but the typical home sale nationwide in Q2 2021 dropped to a net 45% profit margin from 48% in Q1 2021.
Rare Decline in Profit Margin from Home Sales During Spring Buying Season
The spring selling season is typically the hottest home buying season of the year. That being said, profit margins for home sales in Q2 2021 remained far above those one year earlier but fell slightly when compared to profit margins in Q1 2021.
ATTOM Data Solutions’ just-released Q2 2021 US Home Sales Report indicated that the typical single-family home and condominium sale nationwide generated a profit of $94,500. This profit of $94,500 was up from $90,000 in Q1 2021 and from $60,572 in Q2 2020.
However, the profit margin on the sale of that median-priced house or condo dropped from 48.4% in Q1 2021 to 44.9% in Q2 2021. The last time profit margins on the sale of median-priced home dropped in any second quarter was in 2008.
ATTOM indicated the reason profits fell in Q2 was because price gains were smaller than the increases recent sellers had paid when they originally bought their homes.
Median Home Price Hit Another Record High in Q2 2021
Even though profit margins fell in Q2 2021, the national median home price hit $305,000, a record high and an increase of +11% and +22% respectively in Q1 2021 and Q2 2020. In Q1 2021, the median home price was $275,200 and $250,000 in Q2 2020.
Home Prices Up in 98% of US Metro Areas BUT Investment Returns Increased In Only 56% of Metro Areas from Q1 to Q2 2021
Todd Teta, ATTOM’s chief product officer, said, “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. 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.”
Profit Margins Up Annually in 81% of Metro Areas and Quarterly in 56% of Metro Areas
Typical profit margins during Q2 2020 to Q2 2021 increased in 158 (81%) of 195 metro areas. Quarterly, however, profit margins increased in just 109 (56%) US metro areas.
Metros with the largest increases in annual profit margins included:
- Boise City ID – from 59.6% in Q2 2020 to 124.3% in Q2 2021
- Charlottesville VA – from 20.2% to 83.6%
- Scranton PA – from 34.9% to 80.9%
- Claremont-Lebanon NH – from 18% to 57.3%
- Bellingham WA – from 60.8% to 98%
Metro areas with at least 1M people that had the biggest annual profit-margin increases included Rochester NY (from 31% to 64.8%), Detroit MI (from 36.7% to 64.4%), Indianapolis IN (from 40.3% to 59.6%, Atlanta GA (from 32.4% to 51.6%), and Washington DC (from 24.5% to 43.5%).
Metros with the largest increases in quarterly profit margins included:
- Charlottesville VA – from 34.2% to 83.6%
- Rochester NY – from 30.8% to 64.8%
- Charleston SC – from 29.2% to 57.1%
- Scranton PA – from 55% to 80.9%
- Claremont-Lebanon NH – from 35.7% to 57.3%
Profit Margins Down Annually in 37 of 195 Metros (19%) and Down Quarterly in 86 of 195 Metros (44%)
The biggest annual drops in profit margins included the following metros:
- San Jose CA – from 85.6% in Q2 2020 to 67.4% in Q2 2021
- Las Vegas NV – from 45.8% to 30.5%
- Kansas City MO – from 41.4% to 26.5%
- Myrtle Beach SC – from 26.6% to 11.7%
- Los Angeles CA – from 55.7% to 41.3%
The largest quarterly drops in profit margins included the following metros:
- Macon GA – from 73.5% in Q1 2021 to 33.4% in Q2 2021
- Bremerton WA – from 83.8% to 48.4%
- Lakeland FL – 52.7% to 27.6%
- San Jose CA – from 91.7% to 67.4%
- Stockton CA – from 96% to 73.2%
Thanks to ATTOM Data Solutions.
