According to the report, typical single-family home sales across the country generated a gross first-quarter profit of $103,000, down from $107,187 in the fourth quarter, although still well above $75,001 a year earlier.
“Home prices simply can’t continue to go up as rapidly as they have for the past few years,” ATTOM Executive Vice President for Market Intelligence Rick Sharga said in a release. “The combination of higher prices, rising mortgage rates, and the highest rates of inflation in 40 years may be pricing some prospective buyers out of the market, which means we may begin to see lower sales numbers. Ultimately, as affordability worsens, price appreciation should slow down, and we may even see modest price corrections in some markets.”
The lower gross profits came as the national median home price increased only 1.7 percent, from $315,000 in the fourth quarter to $320,500 in the first quarter. That marked the ninth straight quarterly record and was up 16.5 percent from the first quarter of 2021.
Typical profit margins (the percent change between median purchase and resale prices) fell from the fourth quarter of 2021 to the first quarter of 2022 in 71 (42 percent) of the 170 metro areas ATTOM analyzed. The biggest quarterly decreases in profit margins came in the metro areas of Santa Barbara, Calif. (margin down from 72.9 percent in the fourth quarter to 45.8 percent in the first quarter); Boise, Idaho (110.4 percent to 88.8 percent); Brownsville, Texas (54.3 percent to 38.1 percent); St. Louis (37.6 percent to 23.9 percent); and Des Moines, Iowa (48.1 percent to 35.2 percent).
Profit margins increased quarterly in 99 (58 percent) of the 170 metro areas analyzed. The biggest quarterly increases were in Kingsport, Tenn. (margin up from 51.1 percent in the fourth quarter to 71.1 percent in the first quarter); Rochester, N.Y. (57.1 percent to 76.3 percent); Lake Havasu City, Ariz. (58.2 percent to 75.2 percent); Cape Coral-Fort Myers, Fla. (64.2 percent to 80.9 percent); and Toledo, Ohio (39.8 percent to 53.3 percent).
The West continued to have the largest profit margins on typical single-family home sales around the country, with 13 of the top 25 returns on investment in the first quarter from among the 170 metro areas analyzed. The highest profit margins were in Hilo, Hawaii (96.4 percent return); Scranton, Pa. (91.2 percent); Boise, Idaho (88.8 percent); San Jose, Calif. (86.1 percent); and Spokane, Wash. (85 percent).
Most of the smallest margins (21 of the 25) were in the South and Midwest. The lowest were in Lafayette, La. (16.6 percent); Shreveport, La. (17.1 percent); Columbus, Ga. (19.2 percent); Little Rock, Ark. (21.3 percent); and Lakeland, Fla. (22.9 percent).
Median home prices in the first quarter exceeded values from the fourth quarter in 89 (52 percent) of the 170 metro areas analyzed. The biggest quarterly increases in median home prices during the first quarter were in Honolulu (up 7.9 percent); Port St. Lucie, Fla. (up 7.7 percent); Lakeland, Fla. (up 7.6 percent); Austin, Texas (up 7.6 percent) and Cape Coral-Fort Myers, Fla. (up 7.5 percent).
Home prices in the first quarter hit or tied all-time highs in 47 percent of the metro areas in the report, including New York, Los Angeles, Dallas, Houston and Miami.
The largest quarterly decreases in median prices were in Macon, Ga. (down 15.4 percent); Kalamazoo, Mich. (down 10.9 percent); Detroit (down 10 percent); York, Pa. (down 9.5 percent) and Des Moines, Iowa (down 9.3 percent).
Homeowners who sold in the first quarter had owned their homes an average of 5.72 years, down from 6.12 years in the fourth quarter and down from 6.82 years a year ago. The first quarter 2022 figure marked the shortest average time between purchase and resale since the second quarter of 2011.
Tenure decreased year-over-year in 94 percent of metro areas analyzed, led by Lakeland, Fla. (tenure down 82 percent); Salem, Ore. (down 55 percent); Cleveland (down 47 percent); Las Vegas (down 45 percent) and Provo, Utah (down 40 percent).
“Existing home sales typically account for 80 percent-90 percent of all home sales, and increased homeownership tenure over the past decade has had an impact on the inventory of homes available for sale,” Sharga said. “If we continue to see a reversal of that trend, it could bring desperately needed supply back to the market, which would help stabilize prices.”
Eight of the 10 longest average tenures among sellers in the first quarter were in the Northeast or West, led by Honolulu (8.54 years); Bellingham, Wash. (8.31 years); Manchester, N.H. (7.79 years); Hilo, Hawaii (7.65 years); and New Haven, Conn. (7.6 years).
The smallest average tenures among first-quarter sellers were in Lakeland, Fla. (1.28 years); Memphis, Tenn. (3.45 years); Tucson, Ariz. (3.59 years); Cleveland (4.08 years) and Provo, Utah (4.24 years).
All-cash purchases accounted for 34.2 percent of all single-family home sales in the first quarter, the highest level since the first quarter of 2015. That was up from 32 percent in the fourth quarter and from 30.3 percent a year ago.
Cash sales represented the largest share all transactions in the first quarter in Flint, Mich. (61.8 percent of all sales); Detroit (61.5 percent); Utica, N.Y. (54.8 percent); Naples, Fla. (54.4 percent); and Ann Arbor, Mich. (53 percent).
Cash sales represented the smallest share of all transactions in the first quarter in Kennewick, Wash. (17.2 percent of all sales); Augusta, Ga. (17.9 percent); Lincoln, Neb. (18.1 percent); Washington, D.C. (19.4 percent); and San Jose, Calif. (19.4 percent).