Housing Market 2023: Seller Profits Hit 2-Year Low — When Will Be a Better Time To Put Your House on the Market?
Written by
Vance Cariaga
Edited by
Daria Uhlig
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Home sellers in the United States have enjoyed an embarrassment of riches in recent years as the combination of high demand and low inventory pushed prices to record levels. But lately, the market has reversed course. During the 2023 first quarter, profit margins for sellers hit their lowest level in nearly two years as prices either declined or flattened out in much of the country.
Profit margins on median-priced single-family home and condo sales fell to 44.2% during Q1 from 48.7% the previous quarter, according to data released last week by Attom Data. It was the third straight quarterly decrease nationwide and resulted in the lowest investment return since mid-2021.
The decline in profits came as the nation’s median home price rose only 1% on a quarterly basis to $321,135, Attom reported. Home values went down in nearly three-quarters of major housing markets around the United States.
“Homeowners are starting to take a significant hit in the form of lost profits from the recent market slowdown,” Attom CEO Rob Barber said in a press release. “Nine months of varying price declines around the country have carved away almost a quarter of the profit margin sellers were enjoying in early 2022. That’s a striking reversal of what we saw for a decade.”
The good news for sellers is that even with the recent decline, many still enjoy robust investment returns because home prices have been so high for so long. The typical investment return nationwide during the 2023 first quarter was nearly double where it stood only four years earlier. On the downside, the margin was 12 points below its peak of 56.1% during the second quarter of 2022.
With the spring home buying season underway — which typically brings more buyer interest and higher prices — now might still be a good time to consider selling.
“It is possible that the upcoming peak buying season of 2023 could lead to increased profits, owing to favorable mortgage rates and other factors,” Barber said. “Over the next few months, we can expect to gain more clarity regarding whether the current market stagnation is a short-term aberration or a more significant trend.”
Although the Attom report cautioned that the U.S. housing market forecast “remains murky,” there have been positive developments for sellers — including a declining inflation rate. Mortgage rates are also expected to head lower in coming months.
The average 30-year fixed-rate mortgage was 6.43% as of April 27, 2023, according to Freddie Mac. That was up 0.04% from the previous week and represented the second straight week of modest increases. However, rates are still well down from their 2022 peak of 7.08%.
“With the rate of inflation decelerating, [mortgage] rates should gently decline over the course of 2023,” Freddie Mac Chief Economist Sam Khater said in a statement. “Incoming data suggest the housing market has stabilized from a sales and house price perspective. The prospect of lower mortgage rates for the remainder of the year should be welcome news to borrowers who are looking to purchase a home.”
Lower mortgage rates have lured many house hunters off of the sidelines. Even so, sellers might benefit from waiting a little longer to put their homes on the market to take advantage of higher demand in late spring and the beginning of summer.
“Prices need to drop more, and across more markets, before a general revival can occur,” Robert Frick, corporate economist at Navy Federal Credit Union, recently told Forbes in an email statement.
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