Nationally, median home prices fell in the first quarter of 2024, and profit margins followed suit. The national median home price fell 4.3% in the quarter, from $435,000 to $330,000, and profit margins fell to 55.3% from 57.1% in the fourth quarter of 2023.
The decline in home prices was one of the worst quarterly declines in a decade, and this was the second consecutive quarter of declines in investment returns. Still, both prices and margins remained higher than during most of the past decade. In fact, the typical gross profit for a typical home sale nationwide was $120,500 in the first few months of 2024, according to a new report from ATTOM.
One in 59 single-family and condo home sales in Q1 2024 resulted in foreclosure by a bank or other financial institution. This equates to 1.7% of sales. Regions with the highest percentage of real estate ownership sales as a percentage of total sales for the quarter included Peoria, Illinois, Davenport, Iowa, Warner Robins, Georgia, Macon, Georgia, and Baton Rouge, Louisiana.
41.1% of the purchases of detached houses and condominiums are made with cash, which continues to show a slight upward trend. The highest percentages of cash sales occurred in Birmingham, New Hampshire, Claremont Lebanon, Naples, Macon, and Youngstown, Ohio, ranging from 70.1% to 61.7%.
Rob Barber, CEO of ATTOM, said: “The level of cash sales was largely static in the first few months of 2024, but given the recent rise in mortgage rates, that part is easy. It is likely to rise.” “Rising interest rates mean higher costs, and for buyers who can afford it, there is even more incentive to forego a mortgage in favor of an all-cash deal.”
Institutional investors also remained active, capturing 6.2%, or 1 in 16 single-family homes and condominiums. The most affected states were Tennessee, Alabama, Indiana, Kansas, and Oklahoma.
Slumping home prices and profit margins are raising questions about where the housing market is headed. History shows that following a slump at the end of 2022, he surged in early 2023. Barber said an abundance of caution is needed.
“Margins and profit margins are both still very high by historical standards. In this context, the spring buying season will be a great barometer of whether the market engine is still there,” Barber said. he said. Fewer homes for sale could cause prices to rise as competition increases, but mortgage rates above 7% and inflation at 4% reduce affordability.
“The typical profit margin, or the percentage difference between the median purchase price and the median resale price, will increase in 2023 in 89 (66%) of the 134 metropolitan statistical areas across the United States with sufficient data for analysis. 4 quarter to the first quarter of 2024. 53% of these metropolitan areas, or 71 cities, also saw a year-on-year decline, which is where most recent sellers bought their first home. This occurred because median home prices in the first quarter either fell by a larger amount or rose by a smaller amount compared to the changes seen in 63 of the 134 metro areas analyzed (47%). ), the normal profit margin increased each year,” ATTOM reported.
The areas most affected by annual margin declines were Lake Havasu City, Arizona, Naples, Florida, Hilo, Hawaii, Crestview-Fort Walton Beach, Florida, and Port St. Lucie, Florida. Among metropolitan areas with populations of 1 million or more, Honolulu, Hawaii, Birmingham, Alabama, Austin, Texas, San Antonio, Texas, and Salt Lake City, Utah were the hardest hit.
Of the 134 metros surveyed, 63 were fortunate to increase their annual profit margins. These include Peoria, Illinois, Scranton, Pennsylvania, Oxnard, California, Rochester, New York, and San Jose, California. The largest cities with increases were San Diego, California, Tucson, Arizona, and New York, New York.
Typical home prices in the first quarter of 2024 fell quarter-on-quarter in 112 (84%) of the cities surveyed, but were still 3.1% higher than the median price of $320,000 in the first quarter of 2023. The hardest hit areas were Pittsburgh, Pennsylvania, Flint, Michigan, Memphis, Tennessee, Birmingham, Alabama, and Montgomery, Alabama. The metropolitan areas where median home prices remained high were Rochester, Hartford, CT, Cincinnati, OH, Providence, RI, and San Jose.
According to ATTOM data, homeowners tend to stay in their homes longer, with the longest average tenures in Barnstable, Mass., New Haven, Conn., Bridgeport, Conn., Santa Cruz, Calif., and Oxnard. there were. The highest average turnover rates were in Provo, Utah, Panama City, Florida, Austin, San Antonio, Texas, and Chattanooga, Tennessee.
