Homeseller profits decreased in the first quarter, but remained elevated from last year, according to the latest report from ATTOM Data Solutions.
ATTOM released its first-quarter 2021 U.S. Home Sales Report, which shows that homeseller profits nationwide were again up on an annual basis in yet another sign of how the housing market is fending off economic damage caused by the COVID-19 pandemic.
The typical home sale in the first quarter generated a profit of $70,050, or 34.2 percent. That was down from $75,750, or 30.8 percent in the fourth quarter of 2020 but still up 26 percent from $55,750 in the first quarter of 2020.
Small dips in homeseller profits are common in the first quarter of the year as the homebuying season goes into its annual cold-weather lull.
But the raw-profits, as well as the return-on-investments on sales of median-priced homes in the first quarter of 2021, still stood at the second-highest points since the U.S. housing market began recovering from the Great Recession in 2012, ATTOM explained in its report.
They were among the many signs that the nine-year U.S. housing market boom continues to surge ahead even as the broader economy struggles to rebound from the pandemic’s effects.
“The latest data on home prices and seller profits across the U.S. provide the latest markers of how the U.S. housing market keeps roaring ahead even as major parts of the broader economy try to overcome the impact of the pandemic,” said Todd Teta, ATTOM’s chief product officer.
“However, the market did take a break from rising prices in the first quarter of 2021, and while that’s not unusual for the beginning of the year, it’s definitely something to keep on eye on as we move into the spring buying season. The next few months will speak huge volumes about whether the market keeps barreling ahead. For now, though, sellers remain in the driver’s seat, ringing up great profits.”
The elevated profits and profit margins in the first quarter of 2021 came as the national median home price decreased 2 percent from the fourth quarter of 2020, to $275,000, but remained 16 percent higher than where it stood a year ago.
Median values, measured annually, rose in 97 percent of markets around the country with enough data to analyze, jumping by at least 10 percent in more than three-quarters of them.
The latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 12 percent annual gain in February, up from 11.2 percent in the previous month.
Rising home prices and an expected slowdown in interest rates later this year could bring a slowdown to the housing market.
And an upcoming surge in new home listings could change that.
“While buyers were eager in early 2021, sellers have been holding back,” realtor.com Chief Economist Danielle Hale said. “We’ve seen 200,000 fewer new sellers than we would typically see in January and February and an additional 117,000 new sellers were missing compared to the typical year in March.
“These trends have resulted in extraordinarily frustrating trends for buyers, especially first-timers. However, there may be hope on the horizon as we are currently in what is the best time of the year for sellers to list a home for sale in many markets.”