During 2023, national homesellers made a $121,000 profit on the typical sale, leading to a 56.5% return on investment, according to ATTOM’s Year-End 2023 U.S. Home Sales Report.
Gross and profit margins were stagnant—still near record levels—but decreased from 2022, which indicates the first decline in each respective category since 2011.
The gross profit margin on median priced single-family home sales dropped $1,600 in 2022, and year-over-year profit margin dropped from 59.8% to 56.5%.
The decline in profit occurred amidst a year of ups and downs in the U.S. housing market, featuring flat prices, which increased in the spring and dropped off in the fourth quarter.
Additionally, median home prices increased at the smallest annual pace in over a decade—2.1%—from 2022, reaching an all-time annual high of $335,000 in 2023. This price has more than doubled since the 2011 median.
What the experts say
“After a period of rapid growth and high returns, the market might be adjusting to more sustainable levels. This could result in more balanced conditions between buyers and sellers, as sellers may need to adjust their expectations regarding profits from sales, leading to more realistic pricing strategies and possible longer average homeownership tenure,” said ATTOM CEO Rob Barber in a statement. “Real estate markets are highly localized, and while the overall market is seeing less profit, some specific areas might still do well because of their own economic and housing situations. It’s hard to say if this trend will keep going in 2024 and later, as it depends on many different factors like the economy and politics.
“A decrease in seller profits might indicate softer prices, potentially creating better opportunities for buyers,” Barber added. “This could encourage first-time buyers or investors waiting for a more favorable market.”
Profit margins for typical homesellers dropped in two-thirds of the U.S. in 2023, with the worst declines in the South and West, in 84 of the 129 metro areas with ample data for analysis. This occurred as the 2.3% increase in the U.S. median sale price dropped below the usual 4.4% increase that sellers were paying when they initially bought their homes.
Port St. Lucie, Florida, led the way among the 40 largest decreases in investment returns, down from 104.5% in 2022 to 82.7%.
Philip Parisi is a real estate agent with Sea Flag Homes, who caters to Port St. Lucie and its surrounding areas. Reacting to the ATTOM report, he said, “I would assume those numbers would be following suit, just because that’s what the market’s doing. We’re seeing things stay a little bit longer. We’re seeing prices come down a little bit. It’s not a fire sale, but it’s definitely a softening of the market.”
Parisi explained that prior to COVID, 3,409 homes were listed in the greater Port St. Lucie area on the MLS, and that number dropped to 745 in the wake of the pandemic.
“After the rates started to go up, the market started to trend up, so we started to see more and more inventory, and we’ve been sitting right at the 2,200 to 2,500 inventory up until these last couple months,” Parisi explained. “Now, we’re pushing closer to right around 3,100. So we’re not back up to pre-COVID numbers, but when you were down to 700, and now you’ve got four times the amount of inventory compared to almost two years ago, that’s a big uptick.”
The biggest increase in investment returns between 2022 and 2023 was in Scranton, Pennsylvania, from 75.1% to 89.6%.
Gains were small for the most part in 2023, but median prices still increased from 2022, and in 75% of the 120 metropolitan statistical areas around the U.S. with a population of 200,000 or more.
To view the full report, click here.
