Prices and profit margins drop amid Spring buying period
Home prices and seller profit margins continued to shrink in the first quarter, raising questions about whether the long-running housing market boom is indeed ebbing or even ending.
A new ATTOM report showed median home prices across the United States dipped by 4.3% to $330,000 in Q4 2024. This marks one of the largest quarterly declines in the past decade.
Market uncertainty
The drop in home prices has also impacted seller profits. Median profit margins on median-priced single-family home and condo sales decreased to 55.3% in the first quarter – the smallest level in more than two years. That’s down from 57.1% in the fourth quarter of 2023 and 56.5% a year ago.
While seller returns remain strong compared to historical norms, the decline signals a potential shift in the market, according to ATTOM chief executive Rob Barber.
"Due caution is needed in looking at the first-quarter data and what the patterns mean,” he said in the report. “We saw a similar downward pattern from late 2022 into early 2023, and then the market surged.”
Conflicting forces
However, even as seller returns slipped, they remained higher than during most of the housing market boom over the past decade. The typical $120,500 gross profit on home sales nationwide also remained elevated.
“Profits and profit margins still are very high by historical measures,” Barber said. “Amid all that, the Spring buying season will be a huge barometer for whether the market still has steam in its engine."
Several factors are influencing the housing market. Persistent inflation, rising mortgage rates, and affordability concerns are creating headwinds for buyers. However, a historically low housing inventory and a recent surge in the stock market could buoy prices going into the spring buying season.
The report also found that typical profit margins decreased from the fourth quarter of 2023 to the first quarter of 2024 in 66% of the 134 metropolitan statistical areas analyzed and were down annually in 53% of those metros.
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