ATTOM released its Year-End 2022 U.S. Home Sales Report This Week in Real Estate, which shows home sellers realized the highest profit margin since at least 2008. Since 2012 the median home price has grown 120 percent. According to the National Association of Realtors, pending home sales in December increased month-over-month for the first time since May. With a range of just over half a percent for more than 3 months, mortgage interest rates have not seen a narrower, more stable range since late 2021. This week saw purchase applications tick up to the highest level since August. Coincidence, possibly, but stability rather than volatility usually results in an increase in activity. Below are a few newsworthy events from the fourth week of January that influence our business:
U.S. Home Seller Profits Top 50 Percent in 2022 Despite Market Slowdown. Home sellers nationwide realized a profit of $112,000 on the typical sale in 2022, up 21 percent from $92,500 in 2021 and up 78 percent from $63,000 two years ago. 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 percent return on investment compared to the original purchase price, up from 44.6 percent last year and from 32.8 percent in 2020. Both raw profits and ROI have improved nationwide for 11 straight years, shooting up again in 2022 as the national median home price increased 10 percent to $330,000 – yet another annual record. 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 percent. Home sellers in the U.S. who sold in the fourth quarter of 2022 had owned their homes for 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. The latest figure represented the third-shortest average home-seller tenure since 2012. Read the full story here.
Pending Home Sales Increased 2.5% in December, Ending Six-Month Slide. Pending home sales increased in December for the first time since May 2022 – following six consecutive months of declines – according to the National Association of Realtors. The Northeast and Midwest recorded month-over-month reductions, while the South and West posted monthly gains. All four U.S. regions saw year-over-year decreases in transactions, with the West experiencing the largest decline at 37.5%. The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – improved 2.5% to 76.9 in December. “This recent low point in home sales activity is likely over,” said NAR Chief Economist Lawrence Yun. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market. The new normal for mortgage rates will likely be in the 5.5% to 6.5% range. Job gains will steadily become important in driving local home-sales markets,” Yun added. Read the full story here.
The Most Stable Mortgage Rate Trend Since 2021. The new news is that there are a few signs of change. If things were to continue to change as they have in the past few weeks, people would really be talking about a bounce in the housing market. Rates are indeed much improved from 3-4 months ago. But the level of improvement is perhaps not even the most welcome change. Rather, it’s the STABILITY. With a range of just over half a percent for more than 3 months, rates haven’t seen a narrower, more stable range since late 2021. Interestingly enough, this combination of lower and more stable rates PERFECTLY coincides with a noticeable shift in purchase mortgage applications. This week saw purchase apps tick up to the highest levels since August. A word of caution is in order though. Housing played an outsized role in driving inflation over the past few years. The Fed is aware of it. If the market seems like it’s bouncing too quickly, it’s entirely possible that the Fed will do or say something to try to keep things on a simmer. Ultimately, broader economic factors will play the biggest role in determining the trajectory of rates (things like inflation, employment, and measures of economic output). Read the full story here.
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