Home sellers nationwide earned a profit of $112,000 on the typical sale in 2022, up 21% from in 2021 and 78% from two years ago, according to a new report from ATTOM Data Solutions.
In its Year-End 2022 U.S. Home Sales Report, released today, the curator of land and property data nationwide said the increase came despite a market slowdown in the second half of last year.
ATTOM said profits rose from 2021 to 2022 in 98% of housing markets with enough data to analyze. The latest nationwide profit figure, based on median purchase and resale prices, marked the highest level in the United States since at least 2008.
The $112,000 profit on median-priced home sales in 2022 represented a 51.4% return on investment compared to the original purchase price, up from 44.6% last year and from 32.8% in 2020. The latest profit margin also represented a high point since at least 2008, the company said.
“It seems pretty likely that home-seller profits peaked for this cycle in 2022,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “Median prices have declined on a monthly basis since mortgage rates doubled between January and October and are likely to decline further in many markets across the country in 2023, reducing profitability for home sellers.”
ATTOM said both raw profits and return on investment (ROI) have improved nationwide for 11 straight years, jumping up again in 2022 as the national median home price increased 10% to $330,000 — yet another annual record.
At the same time, however, profits increased more slowly than in 2021, reflecting a year in which the nation’s decade-long housing boom stalled. The national median home value fell 8% over the second half of last year as home-mortgage rates doubled, consumer price inflation soared to a 40-year high, and the stock market slumped, ATTOM said.
That cut into the amounts potential home buyers could afford, generating multiple headwinds that threaten to further erode the housing market, cutting demand, and potentially pushing seller profits down, the report said. Total sales last year declined after rising in eight of the previous 10 years.
Among 157 metropolitan statistical areas with a population greater than 200,000 and sufficient sales data, those in western and southern states reaped the highest returns on investment in 2022, the report found.
The West and South had 14 of the 15 metro areas with the highest ROIs on typical home sales last year, led by Hilo, Hawaii, (100% return on investment); Lake Havasu City-Kingman, Ariz. (88.4%); Spokane, Wash. (86.2%); Fort Myers, Fla. (85.4%); and Port St. Lucie, Fla. (84.8%).
Historic Gains
While the full-year median home-price appreciation of 10% in 2022 fell below the 17.6% nationwide gain in 2021, the latest increase in the national median value remained among the best over the past decade, ATTOM said.
Since 2012, when the U.S. housing market was just starting to recover from the Great Recession of the late 2000s, the national median price has grown 120%
Median prices rose from 2021 to 2022 in all but two of the 157 metropolitan statistical areas around the U.S. with a population of 200,000 or more and sufficient home price data in 2022. Values shot up at least 10% in 85 of those metros. Those with the biggest year-over-year increases were in Florida, led by Naples (median up 26.9%); Fort Myers (up 26.7%); Lakeland (up 25.7%); Port St. Lucie (up 24.6%) and Ocala (up 23.8%).
The largest median-price increases in metro areas with a population of at least 1 million in 2022 came in Tampa, Fla. (up 21.9%); Raleigh, N.C. (up 17.9%); Austin, Texas (up 17.9%); Orlando, Fla. (up 17.7%) and Tucson, Ariz. (up 17.2%).
Typical home prices in 2022 reached new peaks in 153 of the 157 metros analyzed, including New York; Los Angeles; Chicago; Dallas, and Houston.
Metro areas where median prices dropped in 2022, or rose by the smallest amounts, were Davenport, Iowa (down 2%); Shreveport, La. (down 1.7%); Baltimore (up 2.7%); Pittsburgh (up 2.7%) and Toledo, Ohio (up 2.8%).
Profit Margins Up
Profit margins on typical home sales improved from 2021 to 2022 in 141 of the 157 metro areas with sufficient data to analyze, ATTOM said. That happened as the 10% jump in sale prices nationwide in 2022 surpassed the 5% increases recent sellers had been paying when they originally bought their homes, it said.
Nine of the 10 largest increases in investment returns were in Florida, led by Fort Myers (ROI up from 51% in 2021 to 85.4% in 2022); Ocala (up from 49.% to 82.4%); Naples (up from 44.7% to 74.4%); Port St. Lucie (up from 62.8% to 84.8%) and Miami (up from 42.9% of 64.1%).
Aside from Miami, the largest ROI gains from 2021 to 2022 in metro areas with a population of at least 1 million were in Orlando (ROI up from 42.2% to 62.%); Tampa (up from 53.8%$ to 73.8%); Jacksonville (up from 43.7% to 58.4%); and Las Vegas (up from 48.8% to 59.8%).
The biggest decreases in investment returns from 2021 to 2022 came in Salem, Ore. (ROI down from 82.7% to 43.1%); Atlanta (down from 43.9% to 36%); Boise (down from 75.9% to 68.9%); Prescott, Ariz. (down from 82.7% to 75.9%) and Sacramento, Calif. (down from 61% to 54.7%).
Other Highlights:
- Home sellers in the U.S. who sold in the fourth quarter of 2022 had owned their homes an average of 5.85 years, down from 5.96 years in the previous quarter and from 6.05 years in the fourth quarter of 2021, ATTOM said. That was the third-shortest average home-seller tenure since 2012.
- Nationwide, all-cash purchases accounted for 36.1%, or one of every three, single-family home and condo sales in 2022. The latest percentage, the highest since 2013, was up from 34.4% in 2021 and from 22.7% in 2020, although still off the 38.5 percent peaks in 2011 and 2012.
- Foreclosure sales to lenders accounted for just 1.2%, or one of every 87, single-family home sales in 2022, the lowest level since at least 2005. The 2022 figure was down from 1.5% of sales, or one in 68, in 2021, and from 3.6%, or one in 28, in 2020.
- Institutional investors nationwide accounted for 6.5%, or one of every 15, single-family home and condo sales in 2022 in the U.S. The latest figure was down from 8.1% in 2021, but was still more than twice the 2.9% level in 2020.
- Nationwide, buyers using Federal Housing Administration (FHA) loans accounted for 7.5%, or one of every 13, single-family home and condo purchases in 2022. That was down from 8.3% in 2021 and from 11.8% in 2020, to the lowest point since 2007.
