About one in every 14 home sales, or 7.2% of home sales nationwide, were “flips” during the third quarter, according to ATTOM.
That’s down from 7.6% of all sales during the second quarter, according to the firm’s U.S. Home Flipping Report.
The report shows that 74,618 single-family homes and condominiums were flipped during the third quarter.
However the average profit per flip dropped for the first time in over a year.
The latest data shows that home flipping nationwide typically generated just a 28.7% return on investment before expenses on homes re-sold during the third quarter – down from 31.2% in the second quarter.
The decrease follows six straight quarterly increases that had signaled a marked improvement for the flipping industry.
The typical profit margin on homes flipped during the third quarter – based on the difference between the median purchase and median resale price for home flips – slid down to only half of the mid-50 percent peak hit in 2016.
It also stayed within a range that could easily be wiped out by carrying costs that include renovation expenses, mortgage payments and property taxes, exposing again the struggles U.S. home flippers are having in turning healthy profits.
Gross profits on typical flips around the country, meanwhile, decreased to about $70,000, ATTOM says
That’s down roughly $5,000 from the prior quarter and $10,000 from highs reached two years ago, although still up slightly from the third quarter of 2023.
“Home flippers just can’t seem to shake the doldrums,” says Rob Barber, CEO for ATTOM, in the report. “After more than a year when things were getting better, they turned notably worse again over the summer.”
“One quarter’s worth of numbers isn’t enough to make any grand statements about another downturn,” Barber says. “The next six months should speak more to that, especially amid an ongoing tight housing market that should work in their favor. But as interest rates remain double what they were a few years ago and inflation keeps raising renovation costs, investors continue to have a tough time making the kind of profits that would lure more into the game.”
Photo: Phil Hearing