Home flipping profits drop at the fastest pace in over a decade

House flippers are having a harder time making fast profits as the market cools.

Gross flipping profit, which is the difference between the median purchase price paid by investors and the median resale price, decreased in the third quarter. That is down from the second quarter and down from the year before. It is the smallest profit since the end of the year.

The return on investment fell due to the drop in gross profits. Not great, but not terrible. It is not the size of the profits that ATTOM is concerned about.

The share of home sales that were flips fell with profits decreasing and higher mortgage rates making it harder for people to buy a home. The number of flips in the third quarter was still historically high but down from the second quarter. In the third quarter of the year, flips made up a 5.9% share of all home sales.

Home prices are going down quickly.

The executive vice president of market intelligence at ATTOM said that fix-and-flip investors aren't immune to the shifting conditions in the housing market. flippers face a much more difficult environment today than they did at the beginning of the year due to the fact that demand from buyers has weakened and financing rates have gone up.

Home prices are still higher than they were a year ago, but the gains are decreasing. Mortgage rates have come off their recent highs, but they are still more than double what they were at the beginning of the year Home sales have dropped for nine months in a row.

Mortgage rates have dropped slightly over the past two months, but most flippers use all cash. That is the same as before.

The cost to flip is one of the factors weighing on investors. The prices for labor and materials are still high. The average time it took to flip a home in the third quarter was 163 days, a slight decrease from the previous quarter. It took 149 days to flip a home last year.

The markets with the highest flip rates were Phoenix, South Carolina; Atlanta, Georgia; andWinston-Salem, North Carolina The markets with the best returns were Buffalo, New York, and Pittsburgh.