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Homeowners took advantage of soaring home values this summer, setting a new record for median home prices in the process, a new analysis by Attom shows.
The median U.S. home price rose to $350,000 in the third quarter, 2 percent higher than the previous record of $343,000 set a quarter earlier and 6.1 percent higher than the $329,900 tallied during the same period last year, according to the data. Profit margins for median-priced single-family homes and condos rose from 56.6 percent in the second quarter to 59 percent in the third quarter.
The third quarter was the second-consecutive quarter in which returns increased following several months of declines. Profit margins, however, remained below the 62 percent level recorded in the third quarter of 2022 and a high point of 62.3 percent in the second quarter of last year.
“Prices and profits around the U.S. got another boost over the summer as the housing market continued recovering from last year’s setbacks,” Attom CEO Rob Barber said in a statement. “Things do remain uncertain heading into the market’s annual fall slowdown, especially at a time when mortgage rates are rising again, home affordability is getting tougher and the potential for a recession hangs in the air. But the latest gains fell in line with what we often see during the third quarter and showed that any predictions of an extended market fallback may have been premature.”
Gross profits on typical single-family homes and condos also went up during the third quarter, rising 5 percent quarterly, to $129,900, a 3.2 percent annual increase.
The supply of homes in the United States remains historically low as would-be homesellers refrain from putting their homes on the market and losing their lower mortgage rate, with rates now nearing 8 percent. The lack of supply has had an upward pressure on home prices, pushing up profits by extension.
Mortgage rates started increasing again in the third quarter however, as did consumer inflation, which ticked up after dropping dramatically over the prior year from 9 percent to 3 percent, both of which have the potential to dampen homeseller profits, according to the report.
Median single family home prices increased from the second to the third quarter of 2023 in 110 (71 percent) of the 155 metro areas around the country with enough data to analyze, and were up annually in 125 of those metros (81 percent) according to Attom.
The metropolitan areas with the largest increases median home prices from the second quarter of 2023 to the third quarter of 2023 were Buffalo, New York, where prices increased 14.7 percent, Scranton, Pennsylvania, where they increased 11.4 percent, Trenton, New Jersey, where they increased 11.1 percent, and New York City, which saw prices jump 9.9 percent.