Highest Home-Seller ROI in Over a Decade

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According to ATTOM Data Solutions Year-End, 2019 U.S. Home Sales Report released This Week in Real Estate, the average home seller profit represented a 34 percent return on investment compared to the original purchase price. The average ROI in 2019 is the highest average home-seller ROI since 2006. Below are a few highlights from the third week of January that influence our business:

Existing Home Sales End Year With Solid Gain. After a slight decline last month, existing-home sales, released by the National Association of Realtors (NAR), surged to a near two-year high in December. Total existing-home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 3.6% to a seasonally adjusted annual rate of 5.54 million in December, the highest level since February 2018. On a year-over-year basis, sales were 10.8% higher than a year ago. Regionally, all regions saw an increase in existing home sales in December except for the Midwest, compared to the previous month. Sales in the Midwest declined 1.5% from last month. On a year-over-year basis, sales rose in all four major regions, ranging from 8.8% in the Northeast to 12.4% in the South. The December inventory decreased to 1.40 million units from 1.64 million units in November and 1.53 million units a year ago. At the current sales rate, the December unsold inventory represents a 3.0-month supply, down from a 3.7-month supply last month and a year ago. Unsold inventory has dropped for seven consecutive months. Homes stayed on the market for an average of 41 days in December, up from 38 days last month but down from 46 days a year ago. In December, 43% of homes sold were on the market for less than a month. The December median sales price of all existing homes was $274,500, up 7.8% from a year ago, representing the 94th consecutive month of year-over-year increases. 

Average U.S. Home Seller Profits Hit $65,500 in 2019, Another New High. ATTOM Data Solution released its Year-End 2019 U.S. Home Sales Report Thursday, which shows that home sellers nationwide in 2019 realized a home price gain of $65,500 on the typical sale, up from $58,100 last year and up from $50,027 two years ago. The latest profit figure, based on median purchase and resale prices, marked the highest level in the United States since 2006 – a 13-year high. That $65,500 typical home seller profit represented a 34 percent return on investment compared to the original purchase price, up from 31.4 percent last year and up from 27.4 percent in 2017, to the highest average home-seller ROI since 2006. Both raw profits and ROI have improved nationwide for eight straight years.

Mortgage Rates Drop to Three-Month Low. The average U.S. fixed rate for a 30-year mortgage fell to 3.6% this week, a three-month low. That’s 5 basis points below last week and 85 basis points below the 4.45% of the same week last year, according to the Freddie Mac Primary Mortgage Market Survey. Sam Khater, Freddie Mac’s chief economist, said mortgage rates now are about a quarter of a percentage point above historic all-time lows. The low financing costs are providing a boost to housing demand, he said. “The very low rate environment has clearly had an impact on the housing market as both new construction and home sales have surged in response to the decline in rates, the rebound in the economy and improving financial market sentiment,” Khater said.

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