Houston's Typical Flip Grossed 3.7% Last Quarter. Selling Costs Alone Run 7%.

By Steve Waller · October 2, 2026

ATTOM's Q2 flipping numbers landed Thursday, and Texas is at the bottom of them

ATTOM published its second-quarter 2026 US Home Flipping Report on Thursday 1 October. Nationally, 77,991 single-family homes and condominiums were flipped, 6.2% of all sales, down from 8.0% in the first quarter and 7.3% a year earlier. The typical flip produced a gross profit of $60,526 on a gross margin of 21.5% - against $66,932 and 25.7% in the first quarter, and $71,000 and 27.6% in the second quarter of 2025. That is $10,474 of profit and 6.1 percentage points of margin gone in twelve months. Margins fell quarter over quarter in 126 of the 186 metros ATTOM measures, 67.7% of them. Average time to flip was 161 days, from 165 in the first quarter and 166 a year ago.

Then look for Texas in the metro table. Among metros of a million people or more, the four weakest gross margins in the country are all Texan.

ATTOM's own words for the worst of them: in San Antonio "the typical flipped home posted a loss on investment of 0.3 percent." Then Dallas at 1.8%, Austin at 2.8%, Houston at 3.7%. The fifth weakest, Salt Lake City, sits at 4.7%. At the other end of the same table, Pittsburgh ran 81.5% and Buffalo 76.6%.

What a 3.7% gross spread actually covers

Read that number carefully, because it is a gross figure. It is the resale price over the purchase price and nothing else. Rehab is not in it. Carry is not in it. Agent commission, title and seller concessions are not in it. ATTOM counts any arms-length resale inside twelve months, so light-touch resales sit in the same bucket as full renovations, and the margin says nothing about what anybody spent on a kitchen.

So put it in dollars on a house. Take a $330,000 exit, which is HAR's August single-family median for Houston. A 3.7% gross margin implies a purchase of about $318,226 and a gross spread of $11,774.

Selling costs at 7% of a $330,000 sale are $23,100. That one line is $11,326 more than the entire gross spread, before a dollar of rehab and before a day of the 161-day hold is paid for.

Run the same arithmetic on the other three and it gets worse. Austin's 2.8% is $8,988 of spread. Dallas's 1.8% is $5,835. San Antonio's negative 0.3% is $993 of loss before anything is spent at all.

The formula would have refused that purchase outright

After-repair value times 70% to 75%, minus repairs, minus closing costs, equals the most you can pay. On that $330,000 exit, with $30,000 of repairs and closing costs at 3% of after-repair value - both assumptions, stated as such - the test allows $191,100 at a 70% advance and $207,600 at 75%.

ATTOM's data implies the typical Houston flipper paid about $318,226. That is $127,126 above what the formula supports at 70% and $110,626 above it at 75%.

Run it backwards and it is starker. To justify a $318,226 purchase with $30,000 of repairs, the after-repair value has to be about $519,740 at a 70% advance, or $483,647 at 75%. Not $330,000. The typical Q2 purchase price in this market was underwriting an exit that was never going to be there.

This is the whole argument in one quarter of public data. Nothing in that paragraph is a financing problem. The financing was available at every one of those purchase prices. The deal died at acquisition.

The ten-year cleared the June 2007 high on Wednesday

Treasury's daily par yield curve has the ten-year at 4.96% on 21 and 22 September, then 5.11%, 5.18%, 5.17%, 5.24% on Monday 28 September, 5.26% on Tuesday, 5.29% on Wednesday 30 September, and back to 5.24% on Thursday 1 October.

The two reference levels worth knowing: the ten-year's 2007 cycle high was a 5.26% close on 12 June 2007, and the 2002 comparison is 5.27% on 17 May 2002. Wednesday's 5.29% is above both of them.

The mortgage followed. Freddie Mac's weekly survey put the thirty-year at 7.28% for the week ending 1 October, up from 7.03% the week before and 6.34% a year ago - 94 basis points in twelve months. The fifteen-year went to 6.60% from 6.42%, against 5.55% a year ago. Mortgage News Daily's index of daily lender quotes read 7.54% on 1 October, six basis points lower on the day, which is the daily market following the ten-year's five-point pullback. Those two are not the same measurement - one is a weekly survey averaged across lenders, the other a daily quote index - so treat the gap as a sign the daily market has moved rather than as a like-for-like comparison.

What that costs the buyer you plan to sell to

Hold a buyer's budget still at $2,200 a month of principal and interest on a thirty-year loan. At 7.03% that carries $329,678. At 7.28% it carries $321,538. At the 7.54% daily index it carries $313,410. A year ago, at 6.34%, the same $2,200 carried $353,935.

One week of rate movement took $8,140 off what your exit buyer can qualify for. Twelve months of it took $32,398, a 9.2% cut in reach. None of that is recoverable with better finishes or a faster timeline.

And the takeout, on a rent that has not moved

HAR's August rental report put Houston's average single-family lease at $2,412 against $2,414 a year earlier, with 4,805 homes leased, up 4.7%. More leasing, no rent growth.

Against a $330,000 basis: taxes at a 2.2% rate - an assumption, not a measurement - run $605 a month, and insurance at the Texas Department of Insurance's preliminary 2025 statewide average of $3,506 a year is $292 a month. On a lender DSCR of gross rent over PITIA, clearing 1.20x leaves $1,113 a month for principal and interest. That supports roughly $166,762 of thirty-year debt at 7.03%, $162,644 at 7.28% and $158,533 at 7.54%. At a bare 1.00x the same three rates support about $227,003, $221,398 and $215,802.

Nothing on the income side offsets it. The rent is flat and the insurance line is five years into a run that TDI's own table prices at $1,987 in 2020 and $3,506 in 2025.

Where ATTOM says the returns actually are

The most useful table in Thursday's release is the one almost nobody quotes. National gross margins by purchase price:

• $100,000 to $200,000 - a typical margin of 28%, the strongest band in the country.
• $200,000 to $300,000 - 26%.
• $300,000 to $400,000 - 20%.
• $50,000 and under - a typical loss of $15,000, a negative 38% return.

That is a buy box, not a coincidence, and it has been the same shape in ATTOM's data for several quarters. The returns live below the market's own median, and the very cheapest houses are not the opportunity - they are where the losses are concentrated. Houston's $330,000 median sits in the 20% band. The 28% band is a different house on a different street, and finding it is acquisition work, not financing work.

The supply side did not move to help

Houston in August, per HAR: 38,947 active single-family listings, up 0.5% on the year, 5.3 months of inventory, 54 days on market against 52 a year earlier. Sales ran 7,100, down 11.5%. The median was $330,000, down 1.5%, while the average rose 1.2% to $426,760 - the signature of a market where the top keeps transacting and the middle thins out.

Build costs went the wrong way again. The BLS index of net inputs to new residential construction rose from 162.934 in July to 164.801 in August, 1.15% in a single month.

What to do with the file on your desk

The test has not changed and Thursday's report is the clearest argument yet for holding it: after-repair value times 70% to 75%, minus repairs, minus closing costs, equals the most you can pay.

So the discipline is on the after-repair value, and it is specific. It is what comparable houses in that subdivision actually closed at in the last 180 days. Not the subdivision's best sale. Not a ZIP-code average - we have measured that error at more than 40% on a real data set. And not today's comp with an appreciation rate laid over the hold period, in a market whose own median is $5,000 lower than a year ago.

One percentage point of after-repair value on a $330,000 exit is $3,300 of value, which is $2,310 of maximum purchase price at a 70% advance and $2,475 at 75%. That is how small an error has to be to matter.

When the formula's answer lands below the asking price, the gap closes in the purchase price or it does not close. ATTOM has now put a number on what happens when it does not close: 3.7% gross, on a sale whose selling costs alone are 7%.

The week ahead

• Friday 2 October, 8:30am ET - the BLS Employment Situation for September, the week's rate event. Survey consensus ahead of the release was about 90,000 payrolls and a 4.1% unemployment rate, with TD Securities looking for 50,000 and 4.2%; August printed 162,000 at 4.1%. No actual figure is quoted here because it had not yet been confirmed against the release itself when this was written.
• Thursday 8 October - Freddie Mac's weekly survey, the first print to fully absorb the labour number and whatever the bond market does with it.
• First half of October - HAR's September Houston report. Watch whether August's 11.5% sales decline was a one-month swing, and whether days on market pushes past 54.
• Wednesday 14 October - September CPI. Thursday 15 October - September PPI, which carries the construction input index.
• Later in October - Census New Residential Construction for September, including whether the collapse in completions holds.

Sources

• ATTOM, Q2 2026 US Home Flipping Report, 1 October 2026
• ATTOM, US Home Flipping Trends by State
• US Treasury, Daily Treasury Par Yield Curve Rates
• FRED DGS10, 10-Year Treasury Constant Maturity
• Freddie Mac Primary Mortgage Market Survey, week ending 1 October 2026
• Mortgage News Daily, mortgage rate index
• Houston Association of Realtors, Monthly Housing Update and MLS Sales Activity, August 2026
• Houston Association of Realtors, Rental Market Update, August 2026
• BLS net inputs to new residential construction (WPUIP231100)
• Texas Department of Insurance, homeowners insurance market overview
• BLS Employment Situation, August 2026
• BLS schedule of selected releases, October 2026

Market data is from public sources and is provided for information only. Nothing here is an offer of credit, a rate quote, or investment advice. Financing is subject to underwriting, lender approval, appraisal or valuation, title, insurance, property eligibility and program availability.

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