Sellers’ Profits Drop From Second Quarter to Third

Sellers’ profits decreased in the third quarter of this year compared to the second quarter, the first drop in nearly three years.

According to ATTOM, sellers made a 54.6% profit on average in the last quarter, down from 57.6% in the second quarter, as home prices have begun falling from a record high in June, both across the country and in Pennsylvania. It was the largest quarterly drop in more than a decade and the first time since 2010 that seller profits decreased from the second to third quarters. Gross profits fell as well, decreasing 6% to $120,000, the largest quarterly drop in five years. While there was a quarterly drop, sellers are still making a higher profit compared to year-over-year statistics. For the third quarter of 2021, sellers made a profit of 48.8%.

In more than two-thirds (68%) of 186 metropolitan statistical areas in the report, profit margins fell from the second quarter. However, the majority (78%) of areas had a year over year increase in profit margins for sellers. Median home prices fell in 53% of areas from the second to third quarters, but prices were up in 97% year over year. Philadelphia was one of the few areas where home prices saw an uptick from the second to third quarter, rising 6.7%.

Cash sales remained high, representing 35.7% of sales, down 0.3% from the second quarter, but up from 33.9% annually.

The average seller lived in their home for just shy of six years (5.98) before moving, up from 5.84 years in the second quarter, but a decrease from 6.28 years last year. This was common across the areas studied, 81% had a decrease in length of homeownership.